Great post here; a topic dear to my heart 🙂
Once ‘lenders of last resort,’ they’re now strongly in demand
The percentage of Canadians using mortgage brokers to buy their homes has increased significantly — especially in B.C. and Alberta — according to a new report.
The Deloitte report, Winning Strategies in the Brokered Mortgage Marketplace, said that in the 1990s mortgage brokers numbered in the hundreds and were “lenders of last resort” for borrowers unable to obtain a mortgage directly from a bank or credit union.
“Over the last decade, an increasing number of viable options for borrowers have surfaced,” said the report, released Wednesday.
“In addition to branch-based lenders, borrowers can now consult with the banks’ own mobile mortgage specialists as well as independent brokers — while also conducting their own research online.
“In this changing and information-abundant environment, the mortgage-brokerage channel has emerged as a legitimate competitor.”
The report said share of origination transactions increased from 26 per cent in 2003 to 38 per cent in 2009 as mortgage brokers made particular inroads with first-time homebuyers and young Canadians.
“Overall, this channel has evolved from a fragmented ‘lender of last resort’ network to a legitimate option for prime customers.”
Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals, said the organization will be releasing its annual report in early November.
“Mortgage-broker share overall is about 25 per cent of the market,” said Murphy. “It’s higher for first-time buyers. First-time buyers are more likely to use a mortgage broker than those that renew their mortgage.
“The percentage of mortgage brokers is higher in Alberta and British Columbia overall.”
Murphy said the percentage of mortgage brokers has grown significantly although in recent years it has levelled off.
“We had big growth in the 1990s and in the first part of this decade,” said Murphy.
“Brokers were very much seen in many ways 20 years ago as the lenders of last resort. So you couldn’t get a mortgage through a credit union or ATB or the bank and you went to a broker. [Brokers] usually charged the higher rate. Usually charged you a fee in order to get a mortgage.
“That’s changed dramatically in the last 10 to 15 years. Brokers are seen in a much more positive light. They shop the market. They have access to different lenders including banks and credit unions and they really work on behalf of the customer,” Murphy said.