If the past has taught us anything, it’s that change is inevitable. The landscape of today’s mortgage industry is drastically different than that of only three years ago. Yes, a large portion of the changes came from the credit crisis that eventually turned into a long worn out recession, which is still affecting much of the world. But even today, our landscape is changing, banks and their specialists are becoming more and more competitive than ever before, mortgage brokerage only lenders are surprisingly moving out of the business and the beneficiary of all of this is the savvy consumer.
The debacle began in 2007 when the mighty Americans had started losing mortgage lenders and banks left and right as their loan portfolios began defaulting at a rate no one ever thought possible. In Canada, the first to go began in mid 2008, and we didn’t really feel that much of a blip in mortgage lending until August, the month prior to the major American bank bailout. At this time, Canadian mortgage brokers had a market share of about 42% of the market, which was still half that of our neighbours to the south, so to us mortgage brokers, we had a long way to go to reach their levels.
Since then, something happened inside the minds of the Canadian banks. They were losing market share in an economy that is one of the strongest and safest on the planet and maybe it’s time to get their share back as it’s better to invest in safety than that of the risky international market. Bank competitiveness was always there, but it was a battle easily won from a mortgage brokers standpoint. We were all self employed and only got paid if that mortgage goes through while the banker still got paid whether the mortgage completed or not. So it boils down to service economics, the mortgage broker has his arsenal of over 50 lenders to filter through to find the best rate and program for the client whereas the bank only has their own products to offer. With the banks being asleep back then, this made our job quite easy, even if we had the same rate. The client was treated with respect and a level of service that the bank couldn’t even come close to matching.
This brings us to 2011, the big banks are out of hibernation and are battling for every mortgage out there to beat the mortgage broker, which I assume from the outside must seem like an oxymoron as mortgage brokers and banks seemingly need each other, but the banks are figuring out that they no longer need the channel if they figured out the right strategy. Funny thing is, we live in a capitalistic country and there are many large investors that see value in our mortgage brokering business and alas, new lenders come in funded by billionaires looking for safe investments (ie. Canadian mortgages).
Lenders have come and gone, but there are a new crop of mortgage lender out there, and they are directing the way the mortgage rates and service are headed more so than the big five banks are. The banks are still bullying the mortgage brokering channel, and are still the faceless institution they’ve always been. They will continue to insult the consumer by not offering competitive rates up front (on the first phone call not the second, and only matching a rate, never beating it), by not offering the service that the consumer deserves (get used to voicemail) and good luck reaching them at night when you need that last minute question answered when you are putting an offer in on your dream house.
In the end, the savvy consumer will win in this atmosphere, as rates are competitive and lenders are looking for their business. Who will prosper between the bank and the broker? Well, it comes down to the individual that offers you not only a great rate and a level of personal service unsurpassed by anyone, but also the one that is truly interested in providing you with advice and information to help you make the right decision for you and your family.
Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group and can be contacted for appointments at 403-343-1125, texted with a question to 403-391-2552 or firstname.lastname@example.org.