Steve Garganis, a broker with Mortgage Intelligence, is worried that some of the chartered banks brokers rely on haven’t been replaced, and it’s affecting their ability to secure good mortgages for their clients.
The A channel banks dole out the best mortgage rates borrowers can get, but in light of the B-20 mortgage stress testing, and even rising interest rates, those mortgages are harder to come by. Garganis says what’s bad for borrowers is bad for brokers.
“We have not replaced some of the major banks as lenders that brokers are able to deal with directly, and it’s been understated,” he told Mortgagebrokernews.ca. “Although I’m not necessarily a Big Six Bank supporter or proponent, they’re a big, and good, supply of money. When they’re not involved with brokers, it’s not good for brokers.”
That might explain the uptick in broker advice that’s been dispensed since the Office of the Superintendent of Financial Institutions made its 200 basis point stress test announcement late last year. But providing client advice is only part of a broker’s job, says Garganis.
“More people are going to brokers for advice and for their mortgages, so that’s good—we know there’s a need for mortgage brokers,” he said. “But we lost National Bank at the beginning of last year. We lost CIBC a few years earlier, and this isn’t good. We want to be dealing with them directly, and maybe someone will step up.”
To elucidate the void left by the Big Six in the broker network, consider that, according to a Canadian Mortgage Trends report, they grew their year-over-year share of the broker pie by 5.4% during the fourth quarter of last year. Moreover, Big Six Banks ate up 750 basis points of share in 2017, to the detriment of mortgage finance companies primarily.
Scotiabank continued its dominance as the broker channel’s lender of choice, scooping up over a quarter (26.6%) of the market share in the third quarter of 2017. However, it should be noted that the bank lost 170 basis points the following quarter, apparently due to less competitive rates.
The mortgage rules have been a boon to the private channel, but whether or not anybody steps up to replace the Big Six like Garganis hopes is anybody’s guess.