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Self-perception can sometimes be at odds with how others perceive us.

New data from Maritz underlines that and challenges common views of how:

  • Consumers see mortgage brokers
  • Mortgage brokers see lenders

…and vice versa.

On Monday at the CAAMP Forum, Maritz researcher Rob Daniel presented an array of stats on how people think in the mortgage business. We’ve summarized them below. (Our views in italics. Key data in green.)

The findings that follow are based on a recent survey from Maritz of 2,000 Canadians.

Among consumers who were polled:

  • 80%: Say mortgages are “good debt”
  • 61%: Say “now is a good time to buy real estate”

By contrast, a whopping 88% of industry participants say now is a good time to buy.

“We’ve got a radically different view from the person sitting across the desk,” says Daniel.

This industry bias may stem from:

  • a better understanding by professionals of the long-term value of owning (which includes other benefits besides the “investment potential”)
  • professionals rejecting the effectiveness of market timing
  • delusion or consumer deception in some cases.
  • 83%: Are “comfortable” with their loan-to-value.
  • 77%: Say “low rates mean that many Canadians own homes who shouldn’t.”

We’re comfortable with our risk levels, but not with others’, says Daniel.

Mortgage Stats

  • 83% of homeowners have 25%-plus equity
  • Only 8% took equity out of their home in the past year
  • 5-7 Years: The average amount of time that Canadians shave off their original amortization by doing things like making prepayments
  • 80% say they can affordably handle a $200/month increase in their mortgage payment (The average tolerable increase is $800 more a month, says Daniel)

Reasons people use brokers:

According to Maritz, there is no dominant reason why people use mortgage brokers.

That said:

  • 36% say getting the best rate is their #1 reason

Interestingly, an RBC mortgage poll last year found that 96% of consumers say the lowest rate is the #1 mortgage differentiator.

Here’s a table showing the rest of a broker’s value proposition, as seen through the eyes of consumers:

Reasons-to-use-mortgage-brokers

(Click to enlarge. Source: Maritz/CAAMP)

Consumer Satisfaction

  • 61%: Were not completely satisfied with their latest overall mortgage experience

“Trustworthy advice” is the #1 driver of mortgage satisfaction, says Maritz. “Personalized service” is second.

  • 43%: Were satisfied with their lender representative
  • 51%: Were satisfied with their mortgage broker

Maritz says wide product selection and good post-sale contact are the key drivers that affect loyalty to brokers. Just 9% of brokers make the right amount of contact with their clients after closing—which Maritz defines as 4-6 times per year.

  • 59%: Were “completely satisfied” with the mortgage they received from an AMP-accredited mortgage broker
  • 35%: We’re “completely satisfied” with the mortgage they received from a Non-AMP mortgage broker

AMP satisfaction may be due to those AMP brokers being more committed to their profession, says Daniel.

  • 43%: Percentage of broker customers who say they would consult a broker on renewal.

Daniel says this number is concerning. As a market researcher, “I’d cut that number in half,” he states.

Mortgage Rule Changes

  • mortgage-rules-201259% of consumers say new mortgage regulations will have a positive impact on the housing market (Only 37% of the industry says the same thing.)
  • Half (49%) of the mortgage industry and 74% of first-time buyers say regulatory changes will harm the housing market.
  • Just 16% of industry participants say the new mortgage regs will have a positive impact on their business

Broker market vital signs

  • 25%: The market share for brokers (This hasn’t changed drastically in seven years, Daniel says)
  • 60%: Percentage of consumers who do not have a good or full understanding of broker services

There’s loads of opportunity there if the industry can find a unified and economical way to boost consumer awareness—which is far easier said than done. Social media is one weapon we have, and one that lender reps use significantly less effectively (possibly due to compliance and corporate restrictions).

  • 68% of consumers say brokers are good for first-time buyers

Brokers are good for everyone, Daniel states.

  • Yet, only 25% of consumers said brokers were “good for me”

Not surprisingly, this ratio happens to be the same as mortgage brokers’ market share.

  • 36% of consumers say brokers are good for people in a “healthy financial position”

These previous two stats show how much the brokerage industry needs to broadcast its value proposition from the rooftops.

  • 35% of consumers say they’re “opposed” to using a broker (The #1 reason: “Loyalty to banks”)
  • 87% would rather have their mortgage with their “current bank” as opposed to “another financial institution”

But here’s the key. Only 5% are willing to pay a higher rate to get a mortgage with their bank. It’s no coincidence that banks do so much rate matching these days.

Brokers and Lenders

  • profitability62%: Percentage of brokers who say lender profitability is “healthy”
  • 36%: Percentage of lenders who say lender profitability is “healthy”

Either way, online competition will eventually force greater discounting and make it more “unhealthy.”

  • 33%: Percentage of lenders who say they “own” the borrower relationship
  • 44%: Percentage of brokers who say they “own” the borrower relationship

Does anyone really have to “own” the client? Either the mortgage originator or the existing lender will offer the better value at renewal (and not just rate, but features, advice and flexibility). That party, or a new lender that delivers the same, should win the privilege of the client’s business for the next term. It doesn’t need to be any more complicated than that, but self-interest makes it so.

Most important factors for brokers choosing lenders

  1. Underwriter support
  2. Service from submission to closing
  3. Speediness of approvals

All of these should be givens at any lender in this competitive market, but they’re not—which is why they’re on this list. Assuming good service at origination (which is a short-term need from the client’s perspective), the #1 differentiators should be rates, features and restrictions. Those are what borrowers care most about overall—and it is clients’ long-term needs that should drive a broker’s choice in lenders.

Near the end of the session, Daniel reminded the audience that debating housing and mortgage topics takes objectivity. We all need to approach mortgage issues using an “evidenced-based balanced view,” he said. But we all know that being truly informed takes effort. Those of you out there who relentlessly self-educate should be proud of yourselves for making that effort.


Rob McLister, CMT

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