Lender mergers: Good or bad?

Lender mergers: Good or bad?

Lender mergers: Good or bad?

Brokers are feeling uneasy with the number of mergers taking place in the industry recently, voicing concerns that a shrinking pool of lenders may nullify their competitive advantage.

“All these lenders amalgamating and buying each other out is the biggest concern I have about the industry right now,” Mackenzie Gartside of Verico Select Mackenzie Gartside & Associates told MortgageBrokerNews.ca. “The number we have access to is shrinking and, as a broker, flexibility is one of my selling points."

However, mergers may have a positive effect on product offerings, say other industry leaders.

“Mergers may be a good thing in terms of the power the lender has in the market and their ability to offer better products through the channels,” Dalia Barsoum of Centum Streetwise Mortgages told MortgageBrokerNews.ca. “As much as people freak out and think it will decrease competition, I always look at it as a way to bring better products and services to the brokerage channel. It’s too early to say what will happen to product offerings (but) I’m not concerned about that kind of movement.”

For other brokers, it’s a different kind of merger that is causing concern, with one particularly concerned about the amalgamation of mortgage brokers.

“(With so many brokerage firms merging), the Re/Max of mortgage brokers will come out of this,” Keith Waters of CYR Funding told MortgageBrokerNews.ca.

Waters believes the best way for smaller firms to set themselves apart from the larger consolidated brokerages is to specialize – a tactic that has worked well for him.

“Smaller shops have to find their niche,” Waters said. “60 to 70 per cent of my business comes from brokers who aren’t specialized (in the areas the clients need).”

  • Ron Butler 2013-08-30 8:03:37 AM
    Economics 101 suggests more competition produces lower pricing for the consumer. That's always a good thing. Particularly in the mortgage space, small companies feel the need to differentiate themselves and they develop products or underwriting programs to suit niches that help us close deals. So in almost all cases: fewer lenders is a bad thing.

    Fewer Super Brokers or Networks? Hard to say what difference that will make in the long run.
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  • Cameron Mackie 2013-08-30 9:23:23 AM
    Lenders have been merging for many years now, but with the merge came a stronger lender with more options for our client, this seems to be thing of the past.

    I remember saying I had access to 40 lenders, we would take that client and fit them into the proper box, every lender had a niche.
    Now when lender seems to merge they remove the niche, providing the end result of the “same box”. With the new regulations there's very little that set them apart. Now it's more like which lender work easiest with the broker to get the deal done. This has left us with only about 10 different lenders now. The rest are underwritten through the same 3rd party underwriting company and their funds are registered with the same trust company. Meaning same guidelines and same investor.....
    They all claim they have different products but I have yet to see those deals get approved.

    Same thing goes with back end insuring, were basically following the guidelines of an insurer. What ever happened to independence, niche and that word call RISK.

    It’s time for new lenders that are lenders, keep the variation and provide a good niche so we can get back to doing what we do best.
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  • Paolo Di Petta | dipettamortgage.com 2013-08-30 10:23:18 AM
    That's just the natural cycle of the lending business - lenders merge and other lenders emerge.

    As the current crop of lenders merge and work their way up the ladder to more cookie-cutter, basic deals, new lenders will fill the niches left open by the players that vacated them.

    Just the circle of life...
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