TD Bank launched a digital mortgage app last week, and other banks are expected to follow suit, but what are the ramifications for the broker channel?
“Long-term, it’s a worry,” said Ron Butler of Butler Mortgage. “These are extremely sophisticated applications that are very expensive to build, and it’s also important to consider the underwriting end where they look at employment and payment information: When you automate down payment and income verification, you save a ton of time and money on the back end.”
Butler added that the amount of money saved could eventually translate to lower interest rates for borrowers because labour costs will have been trimmed.
“Sometimes there are a lot of humans looking at income verification and talking to employers,” said Butler. “That review can sometimes go as long as four hours.”
The TD digital mortgage app offers users features like 24/7 access, saving and resuming, tracking status, and documentation upload—but with a bank mortgage specialist on standby to assist if necessary.
It appears the Big Six are looking to undercut the broker channel. With TD the first to roll out a digital mortgage app, you can be sure it’s only a matter of weeks before the others do too. However, another announcement last week may signal hope yet.
M3 Group announced a partnership with National Bank beginning this April in Quebec, where network brokers will have access to the chartered bank’s suite of mortgage products. The partnership is expected to be available Canada-wide later this year.
“All the applications will be going directly from our BOSS system directly to [National Bank’s] adjudication system,” said Eric Chamelot, VP of lender relations and lender solutions at M3 Group. “Submissions will strictly go through our platform directly to theirs. One strong element for us is that we’ll be the only ones connected in that way to National Bank, so in the mortgage broker space we have de facto exclusivity.
“We’re going down the same channel and technology as they are, so, service-wise, it’s bringing brokers to the same level as mortgage specialists.”
Moreover, at a time when the banks are using technology to cleave costs and hoard share of the Canadian mortgage market, the significance of bringing one back into the fold cannot be understated.
“It’s good to add a bank to the channel—to have a bank coming back,” said Butler. “It’s intriguing that M3 can negotiate with a bank to say they will take a logical level of compensation instead of the high compensations National Bank was paying in the past and eliminate the cost the bank has to use (Filogix) Expert. Through BOSS, the charge will be nominal and, therefore, the bank saves money.”