Q3 2012 Market Share: Broker Lenders

market-share-mortgage

Almost 85% of broker volume was sent to just 10 lenders last quarter. The top 10 broker lenders have not been this dominant in the two years since we started tracking these stats.

The third quarter also saw a migration in broker volumes to non-bank lenders, which isn’t surprising given the exit of CIBC’s FirstLine brand from the broker market.

Here’s a rundown of how the top 10 broker lenders performed last quarter….

The Big 5

1)  Scotiabank (SMA) 
23.6% market share, +6.0 
ppsY/Y
Scotia has been the biggest beneficiary of FirstLine’s departure. Despite somewhat average rates, SMA has scooped an enormous six percentage points of market share in just 12 months.

2)  First National
16.0% market share, +2.1 pps Y/Y
First National currently has no challengers for second place. That said, it lost a hefty 2.9 pps of share versus the second quarter. Part of that was likely due to it cutting commissions and eliminating its “Wizard Spending Account” incentive for status brokers. On a positive note, it offered one of the best adjustable-rate promos in the market at prime – 0.35%.

3)  MCAP 
9.5% share, +2.9 pps Y/Y
MCAP vaults into third spot. It’s had decent rates and it has also picked up its share of FirstLine converts. Broker compensation reductions on one- and two-year terms obviously haven’t hurt it much.

4)  TD Canada Trust
8.2% share, -3.9 pps Y/Y
Does anyone else find it curious how TD missed a major opportunity to amass share when FirstLine wound down?

5)  Street Capital
7.8% share, +2.5 pps Y/Y
Street falls one notch to fifth, but its share has held steady since Q2. It has also posted a nice pickup in business since 2011. The company’s three-year fixed promo was market leading in Q3.

The Balance of the Top 10

6)  Home Trust
6.0% share, +0.8 pps Y/Y
This comes on the back of non-prime/uninsured originations, which grew 34% in Q3.

7)  ING Direct
4.6% share, -0.4 pps Y/Y
It will be interesting to see how many brokers try to reach ING’s status volume targets in 2013, given the uncertainty about what Scotiabank plans to do with ING’s broker channel. That said, brokers still drive the bulk of ING’s mortgage volumes. Word is that Scotia wants to grow ING’s broker business if it can do so cost effectively. Meanwhile, ING has been offering competitive rates and still has among the best mortgage features in the business, two good reasons to route it business regardless of the merger.

8)  National Bank of Canada
3.6% share, -1.7 pps Y/Y
Virtually every National Bank broker in the country was disappointed when NBC raised its All-in-One (AIO) rate to prime + 0.75%. The AIO is its headline product. Restoring it to prime + 0.50% and making a few more common sense underwriting exceptions would go a long way in getting share back. On the plus-side, NBC has made it easier for brokers to qualify for its top-level efficiency bonus, which pays more than most lenders.

9)  Merix Financial
3.1% share, –0.5 pps Y/Y
Merix keeps winning service awards but that hasn’t been enough to grow its share in the last year.

10)  Laurentian Bank
2.5% share, +0.6 pps Y/Y
Laurentian breaks into the top 10 for the first time since we started tracking market share.

Other Movers

  • Volume at mortgage banks has jumped nearly 29% year-over-year.
  • Xceed (+402%), Radius Financial (+174%) and AGF Trust (+151%) were the biggest percentage gainers in terms of volume year-to-date, albeit their growth is coming off a much smaller base than the top 10 lenders.
  • Despite improved service levels and additional products, British Columbia’s Coast Capital Savings has seen its quarterly year-over-year broker volume plunge 88%. That’s what happens when your rates go from the best in the province to above average.

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 third party sources and have quoted it here. This data is not confirmed, but is believed reliable. Note: These market share figures do not count MorWeb volumes but do provide a good proxy of overall market share.


Rob McLister, CMT

  1. I’d like to see a statement from Scotiabank that it intends to leave ING’s broker channel intact after rebranding ING. But I’m not holding my breath.

  2. As good as the All in One is, you can’t be .25% out of the market and expect business. Does anyone know what rate the branches have on the All in One?

  3. I’m really impressed with Scotia’s increase in market share. It must have been some strategic large bulk migration from FirstLine, that helped.
    The top 5 really belong at the top, as they have really been great suppliers and partners to the broker channel.
    Xceed, AGF and CMLS will be fun to watch in the coming years.

  4. I remember how afraid the banks were when ING first opened up many moons ago.
    If Scotia continues to let ING operate and keep GIC rates higher than market competitors, I’ll be surprised too.
    Will Scotia allow ING to continue to market itself as an alternative to banks ?

  5. As a client, one observation: I think it is interesting that, despite all the talk that brokers will look out for my best interests, the most salient factors cited above in choosing between lenders seem to be related to the commissions they pay and/or whether they have a good points program.

  6. The main objective of a mortgage broker/agent is to get a mortgage for you with the best terms and lowest rate for your particular situation. Commission rates paid by lenders are identical in most cases.The 2 examples that you noted are the exceptions. If an agent gets you the lowest rate and you are happy with the terms it should not matter which lender the agent/broker has chosen.

  7. The Top 5 do more than 65% of all the origination. I’ll sum it up simply: they compete for the business. They compete on rates, service, fair compensation, fair terms and product features for the client. They compete on all the key elements that form the mortgage brokerage space.
    I respect the fact the there are many smart, hard working people outside the Top 5 who are held back by top management decisions or funding source issues. I also know some lenders outside the Top 5 are specialty lenders that are critical to providing alternatives for our clients.
    That being said; thanks to everyone in the Top 5 for being on the broker’s side and fighting for our business every day. This is the truth of free enterprise: great competitors create value for both brokers and the public.

  8. Hi Victor, The speculation is that ING will be rebranded with no, or minimal, Scotiabank branding. That will give the new entity an appearance of independence from Scotia, which is important to many ING customers who intentionally avoid the big banks. Cheers…

  9. Hmmm, that sounds exactly like what happened when CIBC bought out FirstLine Trust and rebranded it FirstLine Mortgages.
    It’s deja vu all over again!

  10. Although we will see ING re-branded over the next 14 months as per the sales agreement; I think we will see Scotia maintain the consumer direct focus of that operation for a long time.
    With utter respect for all the great people at ING Broker Services; banks don’t buy other banks to maintain duplicate operations. Scotia already runs the #1 mortgage brokerage origination operation in Canada they don’t need #1(g)in the background.

  11. The only time compensation ever influences my recommendations is when two lenders have very similar mortgages at the same rates. I’m sure there are bad apples but most brokers I know would never recommend a clearly inferior mortgage just to get paid more.

  12. It is no mystery why Scotia gained market shares. Scotia diligently and aggressively went after small professional real-estate investors, created an unproblematic process/product for small professional investors to qualify for mortgages while… the other banks continues to shy away from this segment of the industry.

  13. And now, they surcharge the rates and don’t want investors with 5+ properties…so this doesn’t explain their increase for the past year.
    However, their STEP product is amazing for an investors residence and rental properties.

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