Corporate parent of HomeEquity Bank – Canada’s main underwriter of reverse mortgages -- revealed first quarter results marked by double-digit portfolio growth and a more-modest boost in originations.
HOMEQ's numbers for the three months ending March 31, 2011, largely match company expectations, said President and CEO Steven Ranson, in a statement announcing the financials. While the lender’s mortgage portfolio of $1.1 billion increased 16 per cent, its originations grew by one per cent to $47 million.
“We are happy with the level of originations in the quarter which compare favourably to the first quarter of 2010. This is a significant achievement in light of the fact that originations in Q1 2010 were especially high, having responded strongly to pent-up demand following a period during which HOMEQ had taken active steps to reduce its level of business expansion,” he said, suggesting brokers are primed to play an increasing role in future growth.
As a group,, they brought around 700 leads to the company in 2010. Those mortgage professionals represent 134 firms, and growing.
“Brokers are a very fast growing channel for us, and we see it as growing in the next two to three year,” Ranson told MortgagBrokerNews.ca. “A lot of seniors may not have used mortgage brokers, but we see that changing as the percentage of people using brokers increases and that applies to seniors.”
A growing number of mortgage professionals are adding reverse mortgage referrals to their business models as a way of diversifying revenue streams as new home purchases slow across much of the country. Canada’s aging Baby Boomers are also spurring interest among brokers prepared to help clients 60 and older win loans against their homes. Accrued interest is then tabbed onto the loan’s balance as the mortgage grows. When the client dies or sells their home, that money is then paid back to HomEquity.
During the last quarter, the trailing four-quarter total origination percentage was 6.0 per cent in comparison to 7.7 per cent the prior year.
“HomEquity Bank is meeting growing demand for its reverse mortgages from across the country driven by a number of factors including the increasing number of seniors, Canada's fastest growing demographic,” said Ranson “In addition, competitive pricing, effective publicity and engaging marketing campaigns are making the CHIP Home Income Plan more accessible and attractive to seniors.”
Some 50 per cent to 60 per cent of originations are the result of referrals from banks, financial planners and mortgage brokers.
Bringing that last group up to speed on the ins and outs of HomEquity’s offerings remains a priority, said Ranson.
“We have someone dedicated to serving the mortgage broker industry,” he told MortgageBrokernews.ca, “and we spend a lot of time on the education side.”