MCAP launched a new campaign today designed to take market share from the banks.
Effective immediately, MCAP pays brokers a small bonus when they move an existing Big 5 bank mortgage to MCAP. Mortgages under this promotion must fund with MCAP by June 30, 2011.
In a letter to brokers, MCAP Service Corporation President, Ron Swift, said:
“We are taking the lead by launching the first of what we hope will be many initiatives aimed at growing mortgage broker market share…And we invite other lenders to join forces with us to support the mortgage broker channel and increase market share by targeting customers currently using the banks and other non-broker channels.”
Roughly 1 in 4 mortgages are originated by mortgage brokers. But, banks have a huge edge (i.e. high retention rate) with renewals and refinances.
MCAP also notes that mortgage growth is slowing overall. As a result, it says some brokers have been “taking deals from one monoline lender to another,” which “has a negative impact on the monoline lenders who support the mortgage broker industry.”
MCAP adds: “We need to be focused on increasing our market share by taking business from lenders who do not support the mortgage broker channel.”
From the purely objective standpoint of promoting competition, it’s great to see a non-bank lender rallying the industry against the banks and putting some money where its mouth is. Banks’ retail divisions want to cut our throats, and our industry needs to battle back in a more unified fashion.
On the other hand, brokers must still keep the client’s interests at the forefront. If that means moving a customer from a non-bank to a bank with materially better terms, so be it.