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market share

Broker Lender Market Share – Q4 2017

Banks continued to eat up market share in the fourth quarter, growing their portion of the broker pie by 5.4 percentage points vs. Q4 2016.

For the full year, banks seized a whopping 750 basis points of share, mainly from mortgage finance companies.

Virtually no broker in Canada will be surprised by that. Among other policy “gifts,” the Big 6 were enormous beneficiaries of the Department of Finance’s controversial:

  • termination of insured refinances
  • default insurer capital hikes.

We don’t blame banks one bit. But it’s now clear to see how much government policies injured their competitors, not to mention left consumers paying more (especially on 1- to 4-year terms).

Here’s a look at how last quarter shook out:

Rank  Broker Channel Lender Market Share
Q4 2017*
12 Mo Share
1 Scotiabank 26.6% +810 bps
2 First National 13.1% +190 bps
3 MCAP / RMG 11.4% -460 bps
4 TD Canada Trust 10.5% +350 bps
5 Merix Financial 5.6% -110 bps
6 Equitable Bank 4.9% No change
7 Street Capital 4.5% -460 bps
8 B2B Bank 3.6% +120 bps
9 Home Trust Company 2.9% -480 bps
10 Manulife Bank 2.0% +170 bps

Quick takes:

  • Scotia, the undisputed broker channel leader, ceded 170 bps share in Q4 (vs Q3), due partly to less competitive rates.
  • First National bounced back from an abysmal 2016 Q4.
  • MCAP/RMG lost ground in Q4 but should rebound this quarter on the back of strong 5-year insured/insurable rates and broker promotions.
  • Scotia’s arch rival, TD, also grew year-over-year but lost share (-120 bps) versus Q3. The real story is that it’s now challenging for the #3 spot—which, given its dominance in refinances, it could easily capture this year if it stays rate competitive.
  • Merix’s market penetration was down year-over-year but it still posted its highest share since 2016.
  • Street Capital’s share, like its stock price, was chopped in half y/y. It keeps being plagued by limited access to conventional prime mortgage funding. The company says it is “cautiously optimistic some funding will become available in the first half of 2018, allowing it to selectively offer new prime uninsured products and expand its product suite.”
  • B2B Bank, while out of the market on prime mortgage rates and battling its parent’s doc-fraud issues and underwriting missteps, still posted decent growth in share, up 27% y/y.
  • Home Trust made it back to the top 10 but was well behind rival Equitable Trust. The company will rebound this year as it adds new products, including a switch program.
  • Rounding out the top 10 is Manulife Bank, which posted the highest year-over-year percentage gain at 485% (albeit from a small base). The company hints that new low-ratio products are on the way this year. Hopefully they include shorter fixed terms as there’s a shortage of 1- to 4-year options that can be coupled with a HELOC.
  • Among the provinces, Alberta (again) posted the biggest drop in submission volume last quarter, down 4.9%. And Ontario also shed market share, down 0.6% from a year ago. Quebec led the gains among the provinces, up 4.4%, followed by B.C., up 1.5%.

Data Source: Finastra puts out an excellent 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 Newton volumes (D+H’s smaller but growing competitor) and leave out a few lenders that Finastra doesn’t report by name, like CMLS Financial.