The Consistently Forgotten Lending Partner – The Canadian Mortgage Broker Channel
As we continue to navigate the changes within the Canadian mortgage qualifications and the exploding housing market within the GTA, the needs of the broker channel has not obtained the appropriate amount of attention to how it has been affected and how the changes will shape our businesses moving forward. When the Canadian government outlined the changes to the industry regarding how Canadians can qualify for mortgage loans through the Stress Test, the broker channel expected this to increase the long term business completed on a yearly basis. As the dust continues to settle with regards to expectations, discussion regarding the affects could provide insightful details to consider. Alternative mortgage loans have seen an increase in traction with it now being harder for clients to qualify for preferred bank rate mortgages. This has created an extremely difficult scenario to express to Canadians as many were not mentally prepared for how this change would affect them. Many clients are responsible, are secure employment, and the credit to support a responsible, financial lifestyle approach. As in times past, many expected mortgage products with preferred rates but instead simply could not qualify for a home within the new regulations. Alternative mortgages became an option, but at higher rates and greater down payment expectations in order complete the transaction. For a new family, asking them to increase their down payment from 5.00% to 10.00% or even 20% quickly concludes that you will most likely have to delay the purchase of your dream home. This is an extremely disheartening response to Canadians who have been working hard toward homeownership. Presenting a client with an offer that requires a 20% down payment and with an interest in the 4.00% range has left the broker channel unable to provide clients with solutions that that will agree to. Which is not a solution of sorts from a customer service provider perspective or as a Mortgage Professional. Canadians banks have dominated the mortgage in Canada for many years and have aggressively begun the process of attempting to maintain their position within the mortgage market. Which is to be accepted to maintain survival. Canadians have perceived their banks as the option that represents stability and security to obtain their mortgage financing for many decades. Their reasons have merit: Brand recognition, strong existing relationships with clients, competitive rate options, the ability to cross sell products and there has never been a Canadian Bank that has failed in Canadian history. If a client is intentional about their credit, their income, their down payment; which often takes years to accumulate, they will naturally become risk adverse to protect this. We purchase properties with the intent of improving our quality of life. Conservative approaches to lending have considerably aided in the long term success of the institutions themselves. With powerful branding and resources that appear to be limitless, they have invested in their ideal client and ensure that they remain their first option where trust is the most important factor. Canadians banks appear to be aggressive with maintaining their existing clientele since they are facing challenges with obtaining new clients that can qualify since the mortgage stress test. The approach is natural and makes sense. There are rates and terms being offered to existing bank clients to ensure that they avoid the perceived hassle of refinancing, the cost associated with changing lenders, establishing a new relationship with a lender who you may not know. The Canadian government has not allowed the changes in the industry to allow the broker channel to address the needs of our existing clientele and could possibly aid to the demise of many brokerages who employ many Canadians. This is a topic that matters due to the ripple effect that will be inevitable if we cannot provide mortgage solution that the market requires with respect to alternative mortgage solutions and products. Accepting the new mortgage climate is a challenge I personally welcome, but it is hard to believe that the government may have motives that are designed to destroy the broker channel or eliminate many players by default. Considering that no Canadian bank has ever failed and many of the lending approaches are designed to avoid nationwide catastrophic reactions in the real estate market, what truly was the motive behind this what appears to be a knee jerk reaction to the mortgage guidelines? With the intent of remaining unbiased, Home Trust Capital has shown Canadians that no nation is immune to the possibility of a lender experiencing woes. With a large percentage of Home Trust Company's business generation and development established through the broker channel, it does speak to the nature of the deals that have proven to be an issue with remaining compliant and legal. With alternative business becoming more challenging and no longer being a realistic player in the A business within the mortgage community, the hope of generating and completing business that is best for our clients has become impossible. As I continue to watch this unfold, I urge institutional and alternative lenders to commit to moving Canadian borrowing to a normal that is inclusive to what the family looks like, foresee employment forecasts, become focused on creating products that appeal to a wider range of client requirements. Many agents like myself pride themselves on loan arrangements that are legal, forward thinking, and truly in the best interest of our clients. If our clients require oranges and we can only provide apples, much of our time will be wasted and many Canadians will fall through the cracks for simply not being traditional. I do not have the solutions to the nation's lending problems, and I would be ignorant to suggest that the solution should be immediate or simple. There are many aspects of these changes that will simply be dismissed through organic trial and error. Those strong enough will continue to ride the waves and play an instrumental role in the new climate. The voice of the broker channel can often appear to drown for many reasons. But our voice is just as important as any other self employed or contract Canadians. We need the Canadian government to support us with meeting the needs of our clients and I personally would like to see how they can partner alongside the broker channel and learn what we go through to obtain our clientele in a market that fundamentally believe that our service cannot trump the service and products of the banks. Whatever the changes may be moving forward, home ownership will continue to be an important part of financial success for many Canadians. It appears as many though many solutions the Canadian government has provided are socialist and designed to appeal to the global immigration progress. Canadians can quickly begin to feel forgotten with changes that appear to benefit the wealthy.