As far as Canadian mortgage brokers are concerned, Quebec might as well be a different country.
According to Kim McKenney, DLC The Mortgage Source’s president and broker of record, brokering mortgages in Quebec is decidedly different than in English Canada—especially given that the former allows trading basis points for referrals.
“It has a lot to do with the strength of the banks, bank lending and road reps in Quebec that have traditionally been the source of mortgage financing there,” said McKenney, who’s licensed in Ontario and Quebec. “Their relationships with realtors in Quebec have been strong and they’ve typically paid 50 basis points to realtors for referrals, so that’s a really tough one for brokers to compete against. It hasn’t been the most attractive market for mortgage brokering because to give away half of your commission when banks are doing that, the road reps are doing that, it’s definitely been holding back the channel for sure.”
Scarcity of choice is another issue for brokers.
“We have fewer lenders that go to Quebec,” added McKenney. “We don’t have MICs or B lenders that go to Quebec, so that’s the biggest problem. Lenders are always hoping to go and saying they’re going to change their policies and move into Quebec, but of course the language is different and the legal system is quite a bit different there as well, so that keeps them from breaking into Quebec.”
On the issue lender scarcity, one prominent brokerage head, who did not want to speak on the record, told Mortgagebrokernews.ca that three banks own most of the province’s market share.
“National Bank, Desjardins and Caisse de dépôt don’t let others in—nobody wants to give up a portion of their pie. They were a stronghold back then [when he ran a Quebec brokerage] and they are today. Between them, they hold about 50% of the market, for sure. When you do the math behind that, everybody fights for the other 50%. It’s just easier to do business in Ontario.”
He also believes that homegrown institutions would still resonate more with Quebecers than out-of-province lenders, stating, “They’re very well-recognized and solidly branded. They’re Quebec entities and they have strongholds in their own community. That’s why everybody else finds it tougher to penetrate.”