Broker Market Share—Now and Onward

In Canada, mortgage broker market share began at less than 1% in the 1980s, grew to 14% in the 90s, and peaked at 35% in 2006.

It has now slid to 22%, according to Yousry Bissada.

Yousry-BissadaYousry, who presented at last week’s Axiom Leadership Summit, is one of the most accomplished executives in the mortgage business. He’s held senior positions at Filogix, FirstLine, Paradigm Quest, Canadiana, and TD Canada Trust. His presentation was a fascinating overview of our industry.

Below, we’ve compiled a few of Yousry’s main points about the competition between mortgage brokers and bank mortgage specialists…

  • Branches were “dominant” players in the early 80s. Today they’re down to 40-50% of mortgage originations. Branch share shrank because they couldn’t provide the “convenience, service or expertise” of brokers and mortgage specialists, said Yousry.

Canadian-Mortgage-Origination-Market-Share

  • Mortgage specialists have multiplied spectacularly, having grown from “zero to 35%” market share in just a 15-year period.
  • Broker share, by contrast, has fallen—for different reasons:
    1. Several broker-centric lenders disappeared after their securitization sources (especially ABCP) dried up during the credit crisis.
    2. Broker lenders who currently rely heavily on securitization (i.e., Canada Mortgage Bonds) have been limited by CMHC in how much they can access the CMB market.
    3. Banks started seeing a flood of deposits in 2009 as people wanted a safe place to park cash. Banks chose to lend that cash more aggressively through their internal sales forces, which they heavily invested in. Banks “didn’t need the CMB as much as the little lenders,” said Yousry, and the deposit surge meant they “were able to do a lot more aggressive pricing.”
  • There’s a market share battle being waged between brokers and banks’ sales forces. At the moment, bank mortgage specialists are winning handily, partly because of the reasons above.
  • Banks are cultivating their own internal sales forces because the margins are higher than through brokers:
    • Cross-selling is easier – On average, bank branches cross-sell 3.4 additional products to their mortgage clients (e.g., mortgage life insurance, credit cards, RRSPs, chequing accounts, etc.). By comparison, banks are able to cross-sell broker-originated clients less than two additional products.
    • Renewal rates are better – The Big 5 renew about 90% of mortgages they originate internally, but only 80% of mortgages that brokers originate.
    • Compensation – This wasn’t in Yousry’s presentation but it’s a key point we’ll add. Lenders usually (but not necessarily always) pay brokers more per file than a mortgage specialist.

The positive news for brokers is that, despite the challenges, they’ve maintained their ability to recommend lenders independently (i.e.  they’re not forced to sell only one brand of mortgage like bank staff).

Moreover, “There’s a lot of people working on [how to bring back] disciplined securitization,” said Yousry. “I think new healthier asset-backed [securities] are going to come in.”

That could motivate the creation and expansion of broker-driven lenders and have a noticeably uplifting effect on broker share.


Credits:  Apart from our comments, the above information all came from Yousry Bissada’s presentation, axiom_mortgagewhich was sponsored by Street Capital and hosted by Axiom Mortgage. We’d like to thank Mike Cameron, President/CEO of Axiom, for graciously taping and making this presentation available to us.


Rob McLister, CMT

  1. Thanks for your insightful recap Rob as always appreciate the time and effort you take to provide relevant information. This presentation really summed up my ‘Why’ for taking an active role in trying to improve our channel.
    I hope this will inspire others to raise their game as we certainly need to.

  2. I was at the Axiom Leadership Summit and heard Yousry speak, it was an amazing presentation.
    It is pretty sobering to see that the banks sales force has a bigger market share than the broker channel. We all believe that as mortgage brokers we provide superior service to our clients, so why do we compete with each other? Instead shouldn’t we be figuring out how to unify to promote our service and go after not only the branches but the sales force as well?
    Nothing new here… just wondering how much of a backseat we actually have to take to the banks before we realize that we are in serious trouble here.

  3. Mortgage brokers have the ability to make the buying process easier on the consumer by working with traditional lenders, like banks, as well as private lenders, so we can provide them a broad selection of mortgage and home equity loan products with flexible terms and low rates.
    Since a broker is able to give a buyer more options and with the AIT enabling duly licensed brokers the freedom to do business across the country, I expect to see the broker market share to grow in the coming years.

  4. If these figures are accurate, it’s a significant erosion of market share for brokers. In five years it decreased by almost half. Having more lenders compete for business won’t reverse the trend if everybody’s offering almost exactly the same thing. What has to change, in my view, is the mind set and the value proposition. Agents who are getting into the business today must have a totally different attitude (and plan) than those who started 20 years ago.

  5. Your articles are very informative. A question though, is the graph valid for 2010? Also, in the article, renewals are very strong for the big five. What about the renewal rate for the broker channel? It would be interesting to see the $ values of the same period vs. the number of originators for the same period to show $/originator contribution. Thank you.

  6. “Here’s the Beauty”
    The quality of independent brokers declines as brokerages hire based on a fog a mirror policy(which is based on so-called ad fees of so much a month). Every part time broker who does less than 10 deals per year takes those deals from full time brokers and most likely destroys the image and reputation of brokers to those 10 or less clients a year.
    Go Don Go…

  7. Hi Victor, Thanks for the message. The above graph was directly from Yousry’s presentation and reflects figures from 2010. He stated the lender retention rate was 80% for broker-originated renewals. Cheers…

  8. Interesting story.
    Most financial advisors don’t talk about or get involved with mortgages.
    Most mortgage brokers don’t offer any financial advice.
    Banks often try to do both. Which is why I think they are taking back or keeping more market share. Note the cross sell of life insurance etc.

  9. There is still work to be done raising awareness of the general public about what Brokers can do to help them and the benefits of choosing to have a broker represent you. As an industry I think we are moving forward with this and that we will see in increase in marketshare again.

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