Canada’s mortgage behemoths have long been the likes of RBC, TD and Scotiabank. But as of today, they have stiffer competition: Dominion Lending Centres (DLC).

After months of negotiation, DLC has won the bidding for Mortgage Architects (MA), one of Canada’s top national superbrokers with 1,287 mortgage agents and brokers.

That now gives DLC’s three brands (Dominion Lending Centres, Mortgage Centre and Mortgage Architects)

• 4,800 combined mortgage agents
• Control of ~40% market share in the broker channel
• A whopping $32 billion in annual mortgage volume

According to its press release, this transaction makes the DLC group the largest mortgage originator in the country. (We didn’t have data to confirm that as origination numbers for the major banks are tough to get.)

Either way, $32 billion is sheer enormity, and a remarkable feat for a company just 10 years young. That scale, and the economies it provides, may well prove pivotal if the mortgage business becomes increasingly commoditized in the eyes of net-savvy consumers.

The move could also make lenders and funders take DLC’s influence on the market much more seriously. More on that in days to come.

For more on what this all means to the market and agents, we spoke with Gary Mauris, President and CEO of DLC. Here is that interview.

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CMT: Thanks for sharing your thought process on this, Gary. First things first. What were the key business reasons for doing this deal?

Gary Mauris: We are very committed to this space and think the brokerage channel has a very bright future. Where other competitors have been downsizing, selling outright or selling majority positions, we have been actively investing in this space and will continue to do so in the future. Mortgage Architects was one of the companies that we have had our eye on for some time. They have a very experienced management team, a head office staff that knows our business well and most have been there for a very long time. The network itself is extremely deep in talent. The brokers and agents are some of the best in the space and have an excellent reputation for performance and professionalism.

CMT: Your market share has risen from roughly 28% to about 40%. What type of revenue opportunities or benefits might the company and its agents realize as a result of that added scale?

Gary Mauris: Our consolidated market share will top 40% with this transaction and we believe this solidifies our belief and commitment to the industry in general. There has been some chatter about possible headwinds coming our way with regards to rising interest rates, the cooling of the Canadian housing market and the price of oil in this country. We believe there is strength in numbers and it’s during these times of potential change where being part of the market share leader is most valuable. We are currently number one with 18 out of the top 20 lenders in Canada and we expect this to grow with this acquisition. As an agent, benefits include access to lenders, preferred pricing and products, technology synergies, and brand and financial resources that allow us to continue to innovate, advertise and create new tools…All three brands will now have access to Insureline, our new national Property and Casualty Insurance brokerage, another terrific first for the Canadian Mortgage space.

CMT: Is there any talk about folding the Mortgage Architects and MCC brands into DLC? If not, why does it make business sense to run three separate brands?

Gary Mauris: MA will continue to run independently and as its own brand. MA agents and owners love the MA brand and have been operating their business under this banner for 10 years in some cases. MA, Mortgage Centre and DLC have all co-existed for many years in markets across Canada, and converting one of these brands to the other would be unfair to our owners and agents already operating in those markets. We may look at things like consolidated payrolls, shared head office space and marketing synergies for the organizations, but Mortgage Architects will continue to operate as it always has with the same team in place. The only thing we will do with MA is bring it more stability and a brighter future through increased technology, mortgage products, ancillary products and market share leader strategies.

CMT: I’ve heard a few lenders express worry that DLC is getting too big. What do you think they mean by that? I can only assume they fear a bigger DLC/MCC/MA using its massive volume as leverage to negotiate better economics. Should they be concerned?

Gary Mauris: We have amazing lender relationships and believe it is the cornerstone of our success. We preach to our networks how critically important these relationships are and constantly remind our agents/owners to find ways to become better partners with our lenders. We have longstanding, deep, open communication with our lenders and I don’t think that they should ever have to be worried about how big we become. On the contrary, we believe they look to us as long-term distribution for their products and recognize that we are committed to them and our industry.

CMT: MA brokers have always had a tight relationship with Radius Financial. What will become of that relationship now that DLC owns MA?

Gary Mauris: MA agents will be able to maintain and even build the relationship that they have with Radius. Radius will continue to be one of our partners and we look forward to building an even stronger relationship.

CMT: Do you foresee DLC breaking the 50% market share barrier, and would that likely be done with future acquisitions?

Gary Mauris: We love the broker space and will continue to grow both organically and via acquisitions. We believe the best years for our space are ahead of us and [we] will continue to make strategic alignments that reflect our commitment. Mortgage brokers are a pivotal part of mortgage financing in Canada and provide consumers with choice, competitive pricing, lower overall costs, expert unbiased advice, flexibility in product offerings and convenience. We believe Canadians will continue to support our industry and that the positive increase in consumer consumption (as reported by CMHC) will continue. Ottawa’s mandate is to provide consumers with choice and to limit monopolies, and they are especially sensitive around the big financial institutions.

CMT: Thank you, Gary.

Sidebar: Pacific Mortgage Group, Mortgage Architects’ former owner, is also selling its mortgage lender, Radius Financial. There has been no announcement on who is buying it. Mortgage Architects has been key to Radius’s distribution strategy, with Radius being MA’s in-house lender since its inception in 2008.