Manulife Enters the Broker Space



Manulife-BankAfter months of preparation, Manulife Bank officially entered the broker channel today.

It is a major win for brokers and the bank alike. The former gets important new balance sheet products to sell (e.g., the Manulife One) while the bank gets a dramatic boost to its distribution capability.

Here’s a quick rundown on what you need to know as a broker:

Broker Access & Training

  • Approved brokers must complete a certification program for the Manulife One. It covers how to sell the M1, the types of clients suited for it and the process of inputting a deal. Manulife VP of Retail Sales Jeff Spencer says the bank will be “very selective” about who gets to sell the M1, which is different from most readvanceable mortgages. “Manulife One is a solution to run your entire life from. It’s not a line of credit, it’s not a traditional mortgage.”
  • The majority of brokers will not have direct access to Manulife, but some will have indirect access through broker network deal hubs.
  • “We do look at this as being an exclusive opportunity to deal with Manulife and Manulife One products,” says Spencer. “Because we are looking to have deeper discussions around cash-flow management, debt management and the tailoring of Manulife One to individual client situations, we think it’s important to keep it exclusive.”

Deal Processing

  • Paradigm Quest will underwrite and fulfil Manulife’s brokered mortgages. The partnership lets the bank scale much faster, ensures a familiar process for brokers and ensures resources aren’t diverted from its adviser channel. “We’ve been working with advisers for a long time,” Spencer says. “We do not want to upset those relationships.” More than 70% of Manulife’s mortgage business comes from adviser referrals. (We’ll publish more insight into the Manulife/Paradigm agreement this week.)
  • “Once deals have funded, the servicing will [be done by] the bank,” confirms Spencer.

Available Products

  • Manulife mortgages are full-featured products with what we call “fair penalties” (relative to its Big 6 bank competitors anyway). In other words, prepayment charges aren’t based on inflated posted rates, but rather the discounted rates on Manulife’s website.
  • The Manulife One will be offered through brokers in first position only. An M1 in second position “hasn’t necessarily produced the right type of results for us,” Spencer says. “We haven’t seen enough actual first positions ending up with us in the longer term, and that’s obviously the main reason for coming out with the product.”
  • Broker clients can get an M1 with one all-in-one account and one sub-account at closing. After closing the client can call in to open additional sub-accounts. The $14-a-month fee covers multiple accounts. (By the way, if there’s one thing that critics and competitors will target, it’s this fee.)
  • “Manulife One for Business is a product that we’re making available to the broker community as well. That will be a phased-in process. That’s a separate project from this one. We’re handling all that underwriting in-house.” This commercial version of the M1 goes up to 65% LTV and is currently in pilot with two firms.
  • Manulife will not offer rental financing or non-M1 conventional financing at launch, but hopes to add those products later this year.

Manulife Select

  • The Manulife Select high-ratio mortgage can be configured as a hybrid mortgage with part in a fixed rate and part in a discounted variable rate.
  • Manulife’s Select mortgage comes with a high interest savings account by default.

Compensation

  • Brokers are compensated on the approved limit of the M1. They make 15 bps more if at least 25% of the M1 is in a fixed-rate sub-account.
  • The bank is offering special incentives for broker-owners. “We want to support the person who’s paying the rent and has the sign on the door,” Spencer says.

Market Penetration

  • Manulife has a mini sales army of 95 business development managers and 16 district regional vice presidents, notably more than most broker lenders. These BDMs will work with both brokers and advisers. They’ll go the extra mile, Spencer says, by giving brokers ideas on data mining client databases, giving presentations to influencers and referral sources, and providing brokers with detailed debt management training, among other things.

Manulife is clearly entering the broker market with full force, and after considerable planning. It’ll be intriguing to watch its impact on lender market share over the next 18 to 24 months.

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Comments

  1. Comment avatar

    Joel Sida    

    Great move by Paradigm and finally good news for broker as originators, adding up products/banks instead of losing them.

     
  2. Comment avatar

    Eric Clarke    

    Do you think that the rates for the manulife 1 product will now fall a bit to be a little more competitive compared to some of the rates available through the broker channels with other non-bank lenders?

     
    1. Robert McLister    

      Hi Eric,

      What rates are you seeing out there, and with what lenders?

      The M1’s LOC rate is as good as most lenders at prime + 0.50%.

      And, according to our rate matrix, Manulife’s 5-year fixed rate is the best published rate in the broker channel for a fully readvanceable mortgage.

      Only Alterna has a better rate on a mortgage + LOC combo, but its LOC is not auto-readvanceable.

      Rob

       
      Comment avatar
      1. Comment avatar

        Eric    

        Looking at discounted rates, not published rates, I can only respond with TD rates currently for sure as that is where I am currently and this is what has been quoted to me lately with my heloc/flexline. Currently 2 yr in the 2.09 – 2.14 range and 5 year in the 2.39-2.49 range. I am a little too early to renew as my maturity is the end of the summer but I have been looking into it just to know where rates are at. TD’s product is not an exact match for the M1 product. I guess my question is whether or not the M1 fixed rate portions will be available with rates that are comparable to what a broker could get someone into a fixed rate in a 2,3, or 5 year term in a non Heloc type product from a non bank lender.

         
        1. Robert McLister    

          Manulife’s broker rate sheet only lists 5-year terms so that’s all I can speak to for now. As mentioned, it’s 5-year fixed rates are the best we see in the broker channel for a fully readvanceable mortgage.

          As for TD, it doesn’t offer its HELOC in the broker channel. Moreover, its broker and retail discretionary rates (according to TD reps we know) are well above the 2.39% you’re quoting. And you’re right, TD’s HELOC features are more limited than the M1’s.

          In general, rates for HELOC fixed-rate mortgages are higher than non-HELOC fixed rates. It’s always been like that.

          Cheers…

           
          Comment avatar
  3. Comment avatar

    John Stanley    

    How does a Mortgage Broker go about signing up with Manulife to be authorized to sell this product?

     
    1. Andy Kuyper (Manulife Bank)    

      Hi John,

      You can go to the website we created for interested brokers: http://www.manulifebankbrokerhub.ca
      We have a lot of information to answer any questions you have. If you want to proceed with becoming certified, go to our contact page (http://manulifebankbrokerhub.ca/en/contact-us/) and reach out!

      Cheers!

       
      Comment avatar

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