A seasoned broker is encouraging channel lenders to relax their minimum volume requirements in the short-term, a way of helping an industry struggling to maintain originations even as the Canadian market cools.
“We’re having to work twice as hard to maintain the same volumes as last year, but we're doing it,” Kent Brewer, with Mortgage Alliance Front Gate Mortgages in Fredericton, told MortgageBrokerNews.ca. “Others, especially in smaller markets, may not be doing as well. If the lenders gave brokerages a little more slack in this economy, in terms of meeting minimum volume requirements to maintain status, it would really help those in small markets.”
The comments echo those of several brokers, most scattered across Atlantic Canada, who have shared their concerns with MortgageBrokerNews.ca about idling real estate markets and the potential loss of status with some lenders.
None have suggested that any lenders have moved to ease minimum volume requirements, although they argue that kind of helping hand may ultimately be needed if Canada falls back into recession.
“If lenders were willing to show that kind of easing, it would not only help smaller brokerages but would allow them to maintain a broader scope of lenders, which is, of course, what clients expect of mortgage brokers,” said Brewer.
As it is now, the New Brunswick broker told MortgageBrokerNews.ca, some mortgage professionals are having to channel more of their deals to a smaller number of lenders in order to maintain minimum volumes and, by extension, access to competitive rates.
The phenomenon has the potential to erode client confidence, if, ultimately, their best interests are sacrificed to expediency.
It’s part of the reason brokers have largely embraced the move to efficiency ratios as a better barometer of their performance.
In fact, continued use of volume requirements may undercut efforts to grow efficiency ratios while threatening broker independence, said IMBA President Albert Collu.
“There are lenders that are taking the brokering out of brokering,” he told MortgageBrokerNews.ca. “By continuing to use volume requirements, instead of just going with efficiency ratios, lenders are inadvertently reducing the willingness of brokers to hunt around for the best mortgage for clients in order to fulfill minimum volume requirements with a given lender and maintain status.”
Brewer isn’t asking for a sea-change in the way lenders assess broker contributions, just a little more understanding in tough times.
“It would be appreciated,” he told MortgageBrokerNews.ca. “I don’t think it will come down the pipeline anytime soon though.”