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market share

Broker Lender Market Share – Q1 2018

Credit unions saw their slice of the broker pie shrink in Q1. That comes despite OSFI’s January 1 stress test, which played right into their hands given they are provincially regulated.

Broker market share for CUs fell 0.6% versus Q1 2017. Less competitive pricing was a key reason. In particular, CUs offering non-OSFI compliant mortgages jacked their rates on those products. That clearly tempered demand.

They also limited broker access to these products due to overwhelming demand, regulatory cautiousness and funding limitations.

Nonetheless, numerous brokers tell us they’re doing higher year-over-year volumes with the credit unions that do allow qualification at the contract rate.

Here’s a look at how other lenders fared in Q1:

Rank  Broker Channel Lender Market Share
Q1 2018*
12 Mo Share
1 Scotiabank 26.1% +310 bps
2 MCAP / RMG 15.6% +530 bps
3 First National 12.7% +150 bps
4 TD Canada Trust 8.5% +100 bps
5 Home Trust Company 5.5% -520 bps
6 Street Capital 5.2% -220 bps
7 Merix Financial 5.0% +60 bps
8 Equitable Bank 4.4% -140 bps
9 Manulife Bank 2.2% +120 bps
10 Canadian Western Bank 1.2% +10 bps

The Highlights:

  • Scotiabank: Is down from its record 28.3% share in Q3 2017, but it still reigns supreme. Scotia’s top brass remain impressed with broker performance, as per James O’Sullivan, Group Head of Canadian Banking: “We continue to view ourselves as quite fortunate in that we’re participating in three channels, and we’re particularly pleased with the broker channel.” That said, don’t be surprised if Scotia’s above-average peer growth slows its aggressiveness in the broker channel until its new fiscal year in November.
  • MCAP/RMG: Posted its second-highest share ever in Q1 as it ruled the insured/insurable variable rate market. Getting status with MCAP has become an absolute must thanks to its industry-leading ValueFlex rates. If only it could get its funders to provide competitive uninsured and Fusion HELOC pricing, it could narrow the gap further with Scotia. (We hear there may be good news coming on the uninsured front in the not-too-distant future.)
  • First National: Posted solid 12% y/y single-family origination growth in Q1/18, leaving it with a 12.7% share. Its record high was 18.9% in Q2 2012.
  • TD: The broker channel’s second-biggest bank lender was up year-over-year, but surprisingly down in absolute market penetration, dropping to 8.5% in Q1. Its peak was 13.6% back in Q2 2011 (our records go back to 2010).
  • Home Trust: A respectable 5.5% share for a lender that wasn’t even in the top 10 two quarters prior. That’s still about half of its Q1 2017 peak of 10.7%, which it attained right before the bottom dropped out. But with funding challenges mostly behind it, Home should reassert itself this year as Canada’s #1 non-prime lender.
  • Street Capital: Funding woes and intense competition have kept it down, but new uninsured funding (announced this quarter) could help stabilize its share.
  • Equitable Bank:  Announced a remarkable 27% y/y drop in single-family originations ($609 million) in Q1. That was “surprisingly below” Home Trust’s volumes ($826 million) that same quarter, said one analyst. Equitable’s management told analysts that it dropped the ball somewhat on service and pricing (relative to Home) but that Q2 will be markedly better.
  • Manulife Bank: Rose to the #9 slot with 2.2% share, its best broker market ranking yet. Adding 1- to 4-year fixed terms and a discounted variable-rate option for its superb Manulife One product would make it a force in the channel.
  • B2B Bank: Dropped out of the top 10 for the first time since Q2 2013. Its fall coincides with the company’s mortgage irregularities (disclosed in Q4/17), but (and some brokers may be surprised to hear this) the bank’s spokesperson says, “The mortgage loan [revisions] have not impacted B2B’s growth in the broker channel.” In any case, the elimination of key alternative lending products and/or tightening of their guidelines won’t make life easier for B2B. But the bank says it “continues to work towards [a] $10 billion target of mortgage loans through independent brokers and advisors (its ‘mid-term objective for 2020’), with growth expected to be skewed towards 2019 and 2020.”
  • Radius Financial:  Following the company’s reported attempts to sell itself, it now has near 0% share and is down about 93% y/y.

Among the provinces, Alberta (again) posted the biggest drop in submission volume last quarter, down 4.9% year-over-year. 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 (Finastra’s smaller but fast growing competitor) and leave out a few lenders that Finastra doesn’t report by name, like CMLS Financial and Desjardins.