A new CAAMP poll suggests that brokers are at best maintaining their share of Canada’s mortgage business and at worst…
Of the 2,000 Canadian consumers interviewed for the spring survey report, Stability in the Canadian Mortgage Market, 55 per cent of homeowners said they consulted a mortgage broker before signing off on the biggest purchase of their lives, sometime in the 12 months prior to the April poll. That figure is actually up from 2010, when 53 per cent answered the same way. But when it came time to commit to a mortgage, only 27 per cent did so through a broker, down from the 30 per cent who used a mortgage broker to buy their home a year earlier.
In terms of renewals, refinances and transfers, this year’s survey suggests 35 per cent of Canadian buyers consulted a mortgage broker, although only 19 per cent would ultimately obtain that mortgage through a broker. Last spring’s report captured a slightly different snapshot, with 20 per cent using a broker to obtain that loan, although 40 per cent turned to a mortgage broker during the deliberation stage.
The story for banks was relatively unchanged, with the Big Five continuing to claim about 50 per cent of new mortgages, although their share of refis and renewals actually grew from 56 to 60 per cent over that period.
The report is based on an online survey in April 2011, but since respondents were self-selecting and not randomly picked by a pollster, there’s a danger in reading too much into the year-over-year differences, CAAMP Chief Economist Will Dunning told MortgageBrokerNews.ca: “The differences aren’t statistically significant, so the numbers are approximately the same.”
That may be the case, but the data still points to a broker channel struggling to grow its market share against increasingly aggressive competitors at the banks, insurance companies and credit unions.
“The numbers back up what we’ve been saying that the market share for brokers is stagnating,” CAAMP President Jim Murphy said. “They’re a call for us to redouble our efforts, for brokers to explain to people what makes them different.”
While this spring’s report doesn’t provide a provincial breakdown of market share, B.C. and Alberta brokers have in past years led their counterparts in other parts of the country. But even there, they face challenges that are largely beyond their control, said one Vancouver broker.
“It feels like we’re being squeezed out by the aggressive rates of a certain number of lenders, big banks, that are willing to go very low with their rates in order to retain a client who can bring them business in so many other areas,” Reed Harris, president of Verico Manifest Mortgage, told MortgageBrokerNews.ca. “The federal mortgage rule changes have also disproportionately affected brokers because marginal A clients who can no longer qualify for A mortgages aren’t prepared to go B and all of a sudden pay 6 per cent or higher.”