It’s tough being a small lender in a scale business like mortgages. Davis + Henderson’s latest market share report reflects that.
The top 10 lenders are increasingly dominating the mortgage broker channel. Their share of the pie has climbed for at least three consecutive quarters and now stands at a lofty 84% (up from just under 80% in Q4).
Broker volume has also grown. Mortgage brokers funded 10% more volume in Q3 compared to the same quarter last year.
The mortgage market is clearly alive and well despite all those dreary housing forecasts last fall. (Ultra low rates will do that for you…)
In the text that follows, we run down the notable lender performances this past quarter. These figures are unconfirmed but come from sources we believe to be reliable.
The Big 3
1) Scotiabank 17.7% market share, +1.5 ppsYOY
Scotia’s got a winning model that includes respectable rates, a broad product line, and business relationship managers (BRMs) that are sales, support and underwriter all in one (brokers love a single point of accountability). Scotia’s BRMs are also highly incentivized to service their brokers efficiently and drive volume.
2) First National 14.0% market share, +1.4 pps YOY First National has stealthily moved into 2nd spot. That’s a beautiful thing. Why? Because First Nat serves all brokers, not just “status” brokers. This benefits the broker industry as a whole and is obviously positive for market share. It is also not by accident that First National’s service is ranked best in the business.
3) TD Bank 12.2% share, +1.7 pps YOY
This will surprise many, given the vocally negative feedback on TD’s collateral charge mortgages. TD has obviously been successful in selling collateral charges as a “feature” and incentivizing its biggest brokers to push volume. As much as we dislike collateral charges being forced on consumers, from a purely business standpoint, TD management deserves respect for what they’ve accomplished.
The Balance of the Top 10
We can’t remember the last time that FirstLine, a subsidiary of CIBC, was in 4th place. It’s a staggering fall from a #1 ranking just six months ago. CIBC’s decision to stop competing aggressively on broker rates has cost FirstLine goodwill among brokers, discouraged application submissions, and forced some brokers to abandon their hard-earned “Gold” or “Platinum” status. We miss the FirstLine of old. Something’s got to give…soon.
CMP’s top-ranked lender is holding in 5th place. No drama here.
6) National Bank
Canada’s scrappy #6 bank posted a huge 123% quarterly volume increase YOY. NBC continues to have the best combination of rates, products and status program in the channel. It also has management that knows what brokers need to compete. As fulfillment and servicing kinks get worked out, it could easily move into 5th place. If turnaround times approach the likes of First National and MCAP, NBC could even make a run for the top four.
7) Street Capital
Despite slipping into 7th place, Street had a respectable 1.2 pps pickup in market share. More on Street Capital.
8) Home Trust
Home makes its debut on the list at #8. It’s largely a non-prime lender and from what we understand, it wasn’t counted in prior market share reports.
9) ING Direct
ING slipped to 9th spot after falling behind in the rate market for most of this year. Nonetheless, it did pick up 0.3 pp of share. ING has outstanding product features, employees and culture. We’ve always said that. But rates matter. The average broker can’t sell product, brand and service alone. Not in the Internet age. That aside, ING’s much anticipated HELOC will likely support its market share…whenever it’s eventually released.
10) Merix Financial
Merix held steady in 10th place. It’s got good rates, great broker feedback, and a fantastic team behind it, but it just can’t seem to gain traction despite its unique trailer fee model—or maybe because of it? (Some brokers prefer normal up-front finders fees.) Merix could also use some product diversity, including a good variable, HELOC, equity program and/or a well-priced 1- or 2-year…or more 3- and 4-year fixed promos.
Other Notable Movers
It’s 328% quarterly volume gain (YOY) is tops in the survey.
Coast, operating out of Vancouver, has been one of the most aggressive credit unions in the country, which explains its 208% quarterly volume gain YOY.
If you’re a top-tier broker, ICICI has been among the best priced lenders for 5-year fixed and variable terms. It put up a 131% quarterly volume gain YOY, but like Coast Capital, that’s coming off of a very small volume base.
Source: D+H puts out an excellent report called Lender Insights which compiles lender market share data in the mortgage broker industry. We receive data from that report via 3rd party sources and have quoted it here.