Revealing Broker Stats

Mortgage-Broker-StatisticsHere’s a sampling of intriguing stats about brokers from Maritz Research [Our comments in italics]:

  • Brokers have the top market share of brand new mortgage originations (40%) but hold only a 23% share of the renewal market (which includes early renewals and renewals at maturity).

    [23% seems intuitively high given that 83% of renewers stayed with their current lender, according to CAAMP. However, Maritz notes that brokers sometimes help consumers renew with their existing lender. Whatever the case, the weak share of renewals speaks to the ferocity of lender retention departments.

    Conversely, brokers’ strong share of first-time mortgages reflects brokers’ key value propositions: comprehensive rate/product/lender comparisons along with professional advice from a market-wide perspective.]

  • Those renewing through a mortgage broker saved approximately 40 basis points on their rate versus those who renewed elsewhere (or with their current lender).

    [Part of the reason is that some homeowners simply sign their lender’s renewal letter—a cardinal sin!]
     

  • Maritz found that low rates are the number one factor for clients when making “their initial mortgage placement decision.” Rates are over three times more important than the next two factors, which are lender reputation and pre-payment flexibility.

    [Rate differences among most competitors are modest nowadays (usually 10-15 basis points). What isn’t small (or insignificant) is the difference in guidance that you’ll receive. A mortgage advisor recommending the wrong term can easily cost you 50-100 basis points over five years. The moral: Good advice is a product. By and large, you’ll get what you pay for.

    Secondly, it’s a fact that brand awareness matters to consumers. But in the Internet age a bank can spend $50 million on mortgage marketing and still lose a deal to a broker who undercuts it by 5 bps. We see it every single day.]
     

  • Only 33% of Canadians have a “full” or “good” understanding of what mortgage brokers do.

    [Our industry needs to spend more money on educating consumers. The stats show that broker share is almost double among people with a “good” or “full” understanding of broker value.]
     

  • 58% of mortgage industry participants say there are too many brokers.

    [Not for long. At least, that’s our guess. Increasing bank, credit union, and Internet competition will diminish median earning potential and weed out part-time or weak brokers. Disintermediation is a reality in financial industries and while many relationship-based brokers are insulated from this fate, many less-established brokers are not.]
     

  • Fast approvals are the number one thing brokers look for in a lender. Low rates are #5 on the list.

    [Perspectives will change when more brokers realize how astutely-informed mortgage shoppers have become. Competition will eventually make rates far more important. In time, lenders who only provide best rates to their top brokers could see volume growth stagnate or decline…that is, unless they openly embrace volume pooling.]
     

  • 17% of Canadians are aware of the Accredited Mortgage Professional (AMP) designation, up from 10% in 2007.

    [Brokers with the AMP designation would love to see AMP awareness grow quickly. They view the AMP as a factor that differentiates them versus the banks. CAAMP must ensure, however, that not everyone can get an AMP. One way to do that is by adding quantifiable experience criteria.]
     

  • 40% of Canadians would “strongly prefer” to get their mortgage from an institution that offers other financial products.

Rob McLister, CMT

  1. Thanks for sharing. It was not even on CAAMP site when you published it. The stats are somewhat in line with the present conditions. Yes, the big banks have money to advertise, but brokers are catching up.

  2. Part time brokers should be banned from the industry. It is hard enough to keep up on products when you broker full time. When it comes to financial advice NEVER EVER EVER deal with a part time anyone! EVER!!
    P.S. EVER!!!

  3. What is the incentive for a mortgage broker to renew a mortgage for a client at their existing lender? Or do they look to switch them out to generate another finders fee?

  4. As a broker I check to make sure there is no other product/term/rate on the market from another lender that might suit the clients needs better at renewal.
    If the best option is still offered by their existing lender I wouldn’t dream of having the clients switch just to make a commission.

  5. Some lenders (the smart ones) pay brokers when they renegotiate an existing client’s mortgage or keep them at that lender.

  6. As a part time broker I take great offence to your comment. You have no idea of any full time or part time brokers backgounds, service levels or quality of advice until you spend some time with them.
    Being part time I am at a disadvantage to full time brokers and banks which is why I will consistantly provide better service and top notch advice to my clients.
    If you are having a hard time keeping up with products it may be valuable for you to find a niche and concentrate on those clients and the applicable products. Rather than being a Jack of all trades, be a master of one.
    Good luck!!

  7. I find it hard to believe 17% f Canadians are aware of the AMP designation. Last year I decided to do a small survey. I asked 25 of my clients if they were aware of AMP. The result is 100% were not. AMP is a waste time and a money grab for CAAMP. The sooner more agents realize this, the better.

  8. The poor renewal stats are also the result of poor CRM on the part of brokers. Most lenders don’t provide existing clients with their best rate on renewal. So if a broker signed a client for a 5-year term and during those 5 years has barely kept in touch with the client, the result is fairly predictable. However, if the broker hammers home the point a year or a few months before renewal that early renewals are a pathetic effort by the lender to keep the client or that the client should thoroughly review their mortgage plan, then you get the client thinking. Probably the best way to avoid this predicament is to sign clients to a shorter term and keep things fresh instead of a prolonged period of no communication. Most people out there don’t need a 5-year term anyway.

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