Brokers Rate Lenders

Lender-RatingsCanadian Mortgage Professional (CMP) polled almost 400 brokers about which lender they liked best, based on various criteria.

MCAP came out on top, followed closely by Merix Financial. (Here are the rankings)

What follows are some of the more notable findings from that survey (our comments in italics):

  • 53% of brokers said they do less than 20% of their volume with banks.

    That seems counterintuitive. Banks have the top three spots for broker market share, and command 57% of all broker volume, according to D+H.

  • According to brokers, the most important traits of a lender were:
    1. Approval turnaround time (34% cited this)
    2. Underwriter support (23% cited this)
    3. Overall service level (21% cited this)
  • Rates-on-MortgagesOnly 7% of brokers named “interest rates” as the most important lender trait.

    As mortgages become easier to compare on the Internet and competition gets fiercer, that 7% figure will rise. It’s also somewhat skewed by the fact that 67% of respondents have been in the business for more than five years. At the risk of generalizing, many older brokers have more established clientele, don’t have to fight as hard for business, and can better sell around rate. Newer tech-savvy brokers (who track what’s being quoted online) often tend to be more rate-aggressive.

  • Merix Financial ranked highest for having the lowest rates.

    Merix does lead the market at times. However, these rankings clearly did not account for all “status rates.” National Bank of Canada, for example, ranked 7th, despite having among the best rates of any top 10 lender (if you’re an “MVP” status broker).

  • Banks dominated the “product range” category, with FirstLine (a division of CIBC), Scotia, and National Bank ranking highest.

    Product selection matters because clients have a wide range of qualification requirements. Some lenders try to get by selling only a single competitive term (i.e., a 5-year fixed). That’s like walking into Foot Locker and seeing only one style of shoe. You’re going to drastically limit your business.

    It’s hard to be a market share leader without a HELOC, equity program, good rental program, and/or other non-insured products. Banks have the edge in this respect.


Rob McLister, CMT

  1. 53% of brokers said they do less than 20% of their volume with banks… Yet the D+H report gave the top 3 spots to Banks and stated they had a 57% market share.
    Perhaps MorWEB does have a large enough market share of Brokerage Firms that write enough $ volume to be ‘relevent’ when determine the overall Broker market share…
    That seems counterintuitive. Banks have the top three spots for broker market share, and command 57% of all broker volume, according to D+H.

  2. It’s a different reality these days and mortgages for the banks in many cases have become loss leaders, kind of like Rogers and Bell throwing out these crazy retention plans that have thinner margins just to keep customers from going to the competition. It’s a combination of tactical and strategic methods designed to retain consumers. It’s tactical in the sense that in the short term the company is prepared to absorb the cost of acquiring the client and taking a hit on profit margins to lure the customer. The strategic part is once the customer is acquired it provides the opportunity for long-term relations through up-selling or cross-selling other products and services. For Bell and Rogers, for example, this includes TV, Internet, home phone, business services, etc. and providing additional discounts in exchange for term commitments (and early ECFs) while for the banks it means mutual funds, brokerage accounts, LOCs, credit cards, basically debt because fees and commissions from the personal banking segment is the banks’ bread and butter. It’s no coincidence, for example, that TD bank is now registering mortgages as collateral and recently acquired MBNA’s Canadian portfolio. Personal debt is just huge **** and very lucrative. The bottom line is the banks’ retention staff are working overtime to keep clients from heading elsewhere even if means shackling clients to a steel post. The independent brokers will have to adapt or pay the price no matter how long you’ve been in the business.
    An independent broker sending a deal to a bank these days would almost certainly result in you competing with the bank’s staff for the client on renewal as the discounting has become quite aggressive and consumers have become increasingly sensitive to pricing. The reason for this mindset, at least in my opinion, is because the websites out there that help consumers to “shop around” for a mortgage are focused entirely on the rate and not on strategies or anything else that’s of value.

  3. I’ve heard that from someone before… So where and what is this so called 5% number? Is this number based on 5% of the Total number of Mortgage Brokerage Firms and or Agents registered in Canada? If so, could the MorWEB 5% be comprised of higher volume Firms/Agents where the 80/20 rule applies?
    What I am getting at, is that the $ volume not being reported may explain some of the disparities within the D+H report and the Broker Survey.

  4. Turnaround time and service should be a given. A-lenders that don’t issue approvals in 24 hours deserve to be extinct.
    Low rates should be #1 by a longshot. How else do we compete in this day and age? Don’t give me this 3.49% BS while bonds are at 1.40%. Lenders who can’t compete on rate should get the &$@$#% out of the market!!

  5. I’m willing to bet that the discrepancy between D+H’s numbers and the survey is due to the fact that no broker wants to admit his business is going back to the banks.
    Unfortunately a large portion of my business goes to banks because none of the other lenders have a reasonable rental program…rate or product, as well as not having a HELOC product which is also important for my investors.
    For this to change, we need less “low rate, but CMHC or Genworth insured 5 yr fixed” lenders and more non banks lenders with full product suites like Firstline.

  6. Mortgage Brokers don’t go to Banks as often because the Banks pay them lower finders fees. Brokers go where to the lender with the lowest rates that pays them tge highest fees.

  7. That is misleading. Brokers actualy send more volume to banks than non banks. That is a fact.
    There are also banks with commission bonus options that pay more than the average non bank.

  8. It’s true that most brokers would rather send deals to monolines if they had a choice. Who wants to battle a bank’s retention department at renewal?
    Unfortunately HELOCs and equity programs are balance sheet products and monolines don’t have the deposits to fund them (or fund them at good rates). Until liquidity improves for non-banks, we’re stuck sending uninsurable products to banks.

  9. The finder’s fees only really vary by 5-10 BP’s when you’re at top status level.
    Is that really going to hold back a broker from sending the client to the best product, and getting additional referrals from them?

  10. Kyle Green and others nailed it, you have to send deals to banks because other lenders don’t have products like NBC’s All in One or Scotia Step or FLM Matrix. MCAP has a heloc but not readvanceable. These are the problems. Also banks like Scotia are not charging rate premiums on rentals. I cringe at the thought of deals going to a bank but often there are few alternative options.
    One other thought that may affect the surveys is that some agents, especially new ones may not consider FLM a bank.

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