Yesterday was Day Two of the CAAMP mortgage conference and it featured one of the most insightful segments: Maritz’s mortgage research findings.
Rob Daniel, Managing Director at Maritz, shared a bunch of thought-provoking nuggets, including these (our comments in italics):
- Canadians pay off their mortgages an average of seven years quicker than their original amortization.
(Your amortization can always be reduced by prepayments.)
- 40% of consumers have a good understanding of what mortgage brokers do, vs. 33% in 2010.
(Nice gain in awareness, albeit 40% shows brokers have lots of work left to do.)
- Broker share jumps 52% when consumers have a good understanding of what we do.
- Broker clients collect an average of 2.8 rate quotes for their mortgage vs. 1.8 for bank customers.
- Broker customers expect to pay their mortgage off two years sooner than bank customers.
(This isn’t accidental. Unlike most bank reps, brokers get paid again when you renew. They want/need your renewal and refi business. They therefore tend to view post-closing service in a different light than bank reps, focusing more frequently on interest-saving mortgage strategies. Note: This is general observation because we know some terrific bank reps that do the same.)
- 90% of the average broker’s volume goes to only three lenders.
(Daniels says this doesn’t necessarily mean your broker won’t shop around. It does suggest [to us] that it’s hard for many brokers to get and give good pricing and/or service by spreading volume thin among many lenders.)
- The median age of a broker customer is 36, compared to 42 among lender customers.
(Maritz says broker clients’ household income is also higher than lender clients’, but didn’t provide figures.)
- 61% of mortgage brokers say there are too many mortgage brokers.
(We’d agree. For that matter, perhaps there are too many bank mortgage specialists. The whole industry will get a shakeout as automation, direct-to-consumer models and the Internet increasingly impact our industry.)
- 40% of lenders say profitability is decreasing. Only 13% of brokers agree.
(Is anyone out there still denying that mortgages are becoming more commoditized? We all know what happens to profitability when that happens, although many in our business don’t want to acknowledge it.)
- Lenders and brokers both agree: “Inexperience/inconsistent brokers” is the biggest drawback to dealing with a broker.
(This gets our vote too. We like the good people at CAAMP, but wish they’d bring back the 2-year experience requirement to get an AMP designation. Dropping it was the biggest mistake they’ve made in our view. The 2-year rule was our industry’s best chance thus far at setting rudimentary objective criteria for establishing a broker’s professionalism and experience.)
- 36% of the mortgage industry says there is a real estate bubble vs. 63% of consumers
(Are brokers less swayed by media, or simply brushing off the clues? If the latter, are the clues overly skewed to Vancouver/Toronto, and are they conclusive?)
- Consumers’ top reasons for using a broker (in this order): To get a good rate, to benefit from a broker’s research, to get multiple quotes, and to obtain product/term recommendations.
- Consumers’ top reasons for not using a broker (in this order): loyalty to a bank, they “didn’t think about it,” and they “didn’t think brokers could get them a better deal.”
- 90% of consumers are satisfied with their broker vs. 87% who say they’re satisfied with their bank
- Brokers choose lenders based on (in this order): Rates, speed of approvals, service from submission to closing, and underwriter support.
- 96% of consumers want post-sales communication from their broker.
- Clients say the optimal number of times they wish to be contacted by their broker is 4-6 time a year.
(Just 9% of brokers actually contact clients that often.)
- 22% of brokers say they see less than half of their customers in person.
(The e-movement should push this figure higher. It was mentioned that selling online leads to a more transactional/commoditized service. It doesn’t have to be that way. It’s just that no one has yet perfected online relationship building in the mortgage channel.)
Daniel had some notable quotes as well:
- “Consumers don’t trust our industry (as much) if they don’t understand how the broker gets paid.”
- Find a reason to stay in front of your customers “every 2-3 months,” he says. “They’re asking you to.”
- “I wouldn’t kid yourself on the amount of money required raise consumer awareness.”
(Which is why banks with deep pockets have so much more branding power than brokers.)
- Finding a way to reduce fraud “is a great way to build a relationship with your lender.”
Maritz’s research was commissioned by CAAMP and surveyed 2,000 Canadians in October 2011.
Rob McLister, CMT