Cutting out intermediaries is common practice in this highly digitized epoch, and mortgage brokers are susceptible to becoming casualties in as little as a decade.
Banks have mortgage apps available to borrowers, but they’re just one of the ways in which brokers are being undermined. Another way, according to Butler Mortgage’s founder, is through call centres.
“Banks have large commission sales forces that work independently of mortgage brokers,” said Ron Butler. “In the case of RBC, CIBC and TD, they’re wildly successful, powerful entities in this marketplace. Would banks prefer to turn that sales force into a call centre? Of course they would; it’s greater quality control because it’s all under one roof and you record the conversations. It’s cheaper to do, too. At the end of the day, there’s a reason why, if you want to talk to someone about your credit card, you don’t go to a branch, you use a call centre. It’s more convenient, and as time goes on people will demand convenience.”
Butler has been right at least once before. He stopped advertising with Yellow Pages 17 years ago.
In addition to banks, the internet is playing a central role, as well, and it won’t be long until it noticeably supplants traditional brokers.
“People will start to worry in three years, in five years we’ll see the numbers fall in an alarming way, and in 10 years there will be incredibly less of us,” said Butler. “That doesn’t mean some people won’t be working the call centres, because you have to have knowledge to talk about mortgages, but the pure mortgage agent today, the plain vanilla mortgage agent, there will be tremendously fewer.”
While there very well could be fewer brokers and agents in 10 years, they won’t disappear completely. There will be a metamorphosis, though. Brokers who specialize in niches like rental properties and languages will remain in business, especially as Canada keeps increasing annual immigration quotas. Should Justin Trudeau win another term next year, it could happen sooner than later.
“The mortgage industry will turn into people who work in specific languages and specialists like a subprime mortgage specialist or a rental expert, because those are specialized areas. You need to be very knowledgeable to navigate those waters,” said Butler.
“But we’re talking a narrow scope—people who want to be comfortable in a language group, people who have credit impairment or some kind of income problem and don’t qualify, or people who want to buy rental properties. That whole grouping represents only about 18% of mortgages in Canada, now that the mortgage rules have changed.”
Sandra Tisiot, a mortgage agent with DLC Smart Debt, isn’t convinced her profession will be superfluous in a decade. On the contrary, she reckons mortgage brokering has an essential human touch.
“There’s more online competition and online research, but the fact of the matter is customers still like dealing with the warm and fuzzy human being, and we’re not going away anywhere anytime soon,” she said. “More of the transaction will happen online, but there will be somebody to walk the borrower through.”
Butler, however, is steadfast: The concept of the intermediary will be doomed by digitization.
“But not getting a haircut, not going to the dentist or getting a massage. Where you require a human touch of service, they’re not doomed. But if you can do it online, you will do it online—simple as that.”
Butler added that the mortgage brokers of the future will specialize in rentals, B lending, and languages.
“You can’t fight the future,” he said. “Just ask the Yellow pages.”
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