Broker volume in 2011 and 2010 was effectively the same, according to Davis + Henderson’s latest market share report.
There was a notable shift in rate preference, however.
A total of 74% of broker-originated approvals were for fixed rates, versus 23% variable. That’s the highest fixed-to-variable rate ratio since summer 2009.
Smaller lenders captured a bigger piece of the pie in Q4. The top 10 lenders held 81.4% market share, down from 84% in Q3.
Below, we list the notable lender performances from this past quarter.
The Big 5
1) Scotiabank (SMA)
16.3% market share, +2.7 ppsYOY
The broker exodus from FirstLine is probably benefiting Scotia more than any other lender, at least on a total volume basis. Scotia continues to offer a broad array of products and strong pricing on shorter terms, like its 2-year and 3-year.
2) First National 12.4% market share, –0.3 pps YOY First National stays in second position. It offers exceptional broker service, along with decent rates for non-status brokers (like its competitive 4- and 10-year specials).
3) FirstLine 10.2% share, –5.5 pps YOY
There’s not much new to be said here. FirstLine is a critically ill patient that probably won’t be in the top three for many more quarters. No one will know if its condition is terminal until CIBC announces the results of its divestiture efforts.
4) TD Bank 9.3% share, –2.6 pps YOY
TD lost significant broker share both quarter-over-quarter and year-over-year. It may lose more after tightening its equity lending policies in February.
5) Street Capital 7.5% share, +3.0 pps YOY Street vaults impressively into 5th place. That’s a strong move from 8th spot one year prior. Unfortunately, Street has also pulled back on stated income, equity and rental lending, which may adversely impact its volumes.
The Balance of the Top 10
6) MCAP 6.3% share, –0.8 pps YOY
MCAP drops out of the top five, where it’s been for several quarters. It’s scheduled to bring ResMor’s mortgage operations into the MCAP fold this month. We’ll see if that helps. (Related: MCAP Buying ResMor’s Mortgage Book.)
7) Home Trust 5.8% share, –2.8 pps YOY
Home is not pushing its Accelerator “A” products “with the same vigor” as it used to, according to CEO Gerald Soloway. Prime business has been taking a second place to its more profitable “B” Lending products.
8) National Bank of Canada 5.0% share, +2.3 pps YOY
NBC had the biggest Q4 volume gain (90% year-over-year) of any lender in the top 10. Its pricing hasn’t been as sharp as last year but NBC still has among the best: a) 1-year fixed pricing for status brokers; b) nationally available cash-back mortgage; c) 180-day rate hold; and d) rental program.
9) ING Direct 4.9% share, +1.6 pps YOY
ING moved up one spot in 2011. It’s been mostly out of the market on rates in the last quarter, but its 10-year term is fantastic. It also now has a HELOC offering, which may draw a bit more interest (it would draw a lot more if it were automatically readvanceable).
10) Merix Financial 3.7% share, -1.1 pps YOY
Few companies try harder for their brokers. Unfortunately, Merix has to rely heavily on selling 5-year fixed product. Five-year mortgages are the vanilla ice cream of our business, and it’s tough to grow unless you’ve got the lowest rates and best upfront compensation. Merix has fallen three positions to #10 in the past four quarters, despite its signature trailer fee program.
Other Notable Movers
ICICI had the biggest increase in rank of any lender, moving 8 spots from 21 to 13. Volume soared 625%. If it wanted to, it could definitely make a run for the top 10 next year—assuming its leading rates and free refinance package continue. Word is, however, the powers that be want to grow at a very measured pace. That’s made it tough to get on ICICI’s status broker list.
Equitable Trust Equitable posted a 129% fourth-quarter volume gain (YOY). We suspect its growth will continue as brokers look to Equitable to fund certain stated income deals that banks are suddenly not so hungry for.
Source: D+H puts out a terrific, non-public 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. This data is not confirmed, but is believed reliable.