Broker Market Share – Q3 2015

Lenders’ fight for broker volume has become a little more interesting. TD Canada Trust, B2B Bank and National Bank have all made noteworthy moves in the last quarter. More on that in a second.

First, here’s a look at overall broker market activity as reportedly measured by D+H:

  • Industry-wide broker submissions rose a remarkable 11.7% year-over-year. Why is that remarkable? Because industry estimates show the overall mortgage market up by only 5.9%.
  • As a group, the bank segment increased market share by 2.0% y/y, while mortgage banks lost 2.5%. Credit unions eked out a 0.4% increase.
  • Mortgage banks still do the lion’s share of broker business with 43.2% penetration, versus 37.3% at the banks. Of course, we all know who facilitates funding for those smaller mortgage banks—primarily Big 6 banks.

Here’s a look at the reported market share for the top 10 lenders in the broker space, as of the third quarter…

Rank  Lender Market Share* 12 Mo
Change
1 Scotiabank 17.7% 0 bps
2 First National 15.5% -200 bps
3 TD Canada Trust 9.6% +90 bps
4 Street Capital 7.8% -130 bps
5 Home Trust 7.7% -170 bps
6 MCAP 6.8% -30 bps
7 Merix Financial 6.7% +200 bps
8 RMG Mortgages 4.8% -90 bps
9 B2B Bank 3.7% +200 bps
10 Equitable Bank 3.5% +50 bps

 

Quick takes:

  • Scotiabank remains a rock in first place.
  • First National’s share dropped materially. In its earnings report it said “securitization became comparatively less profitable” in the third quarter, origination costs rose marginally and it had to rely more on institutional funding. In turn, its standard 5-year fixed and variable rates during the quarter were average at best.
  • TD has shown impressive volume growth, rising four places in just two quarters. That’s largely thanks to better service (made possible through its outsourcing agreement with First National) and broker promotions.
  • MCAP and its RMG Mortgages division, combined, still amount to the #3 lender in the broker channel with 13.5% share. There are apparently no plans to combine the two brands as they don’t want to break what’s working.
  • Home Trust lost significant ground after having to cut off 45 brokers for alleged fraud, including some very high-volume producers.
  • Merix had a strong quarter. It has worked hard to diversify its funding sources, which has kept its rates better than average. “Supporters don’t have to check to see if we’re in the [rate] market,” CEO Boris Bozic told us recently. “They just know we are, so it becomes habit forming.” It’s also benefited from management restructuring earlier this year, more origination staff and a refocused Lendwise brand that lets brokers get paid more up front, instead of by trailer fees.
  • B2B Bank finally broke into the top 10 (Laurentian Bank, its parent, was in the top ten two years ago). This was a matter of time, with the bank showing strong volume growth in previous quarters. It’s got solid niche products, a 35-year amortization and a key partnership with the second-largest broker network in Canada: VERICO.
  • For the first time in the five years that we’ve tracked broker share, National Bank fell out of the top 10. For most of the quarter it was simply out of the rate market. It appears (to this author) that the bank is trying to subtly reduce its reliance on broker volume and build up originations in its retail channel.

  • Data 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. The data above is not confirmed, but is believed reliable. Note: These market share figures do not count MorWeb volumes (D+H’s smaller competitor) and leave out a few lenders who D+H doesn’t report, like CMLS Financial.
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