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Monday, July 25th, 2016

Mortgage Brokerage Chiefs Speak Out

Mortgage Brokerage Chiefs Speak Out

Vancouver Mortgage BrokerThe heads of Canada’s largest mortgage brokerages spoke at the recently-concluded CAAMP Forum in Vancouver.

They opined on industry risks, rates, broker attitudes and competition, among other hot topics.

Here are the highlights…

The Panel

Five brokerage industry leaders participated: Michael Beckett (Mortgage Alliance), Colin Dreyer (VERICO), Martin Leedham (Visiting from the Australian Finance Group), Gary Mauris (Dominion Lending Centres) and Grant Thomas (TMG The Mortgage Group).

Here’s what they conveyed (Our comments in italics)…

On the brokerage business:

  • “We have seen our brokerage margins compressed to unbelievable levels.”—Thomas 

    (He said that revenues are no longer there to invest in technology and broker awareness campaigns. He added that industry collaboration is necessary to further the broker value message.)

  • “We’re absolutely going to see more consolidation than ever before” in the brokerage market.—Mauris

On broker opportunities:

  • “The era of cross selling is upon us.”—Dreyer
     
  • “The biggest growth is in the “B space…Become a ‘B’ expert.”—Mauris
     
  • Brokerages are providing more tools than ever before, but brokers have to use them…”—Dreyer
     
  • “Kodak became extinct when it didn’t move fast enough during the digital revolution.”—Mauris 

    (His message is simple: Brokers must adapt to new realities. History is littered with companies that didn’t change with competitive and technology-driven trends.)

On industry initiative:

  • As industry leaders, “we’re very good at talking. We have to get much better at doing.”—Beckette

On rates:

  • Rate-competition“We should never be offended that someone asks for a better price.”—Dreyer
     
  • Why is 2.94% so much better than 3.09%? It’s irrelevant in the whole scheme of things.”—Thomas 

    (The industry-laden crowd applauded that statement. But Amanda Lang addressed his question best: “You want the rate your neighbour got.” That 15 bps spread equals $1,200 on an average mortgage over five years. Consumers are realizing that it’s not an “OR” decision. It’s not great service/guidance OR a great rate. It’s an AND proposition. Consumers today expect both rock-bottom rates and top-notch advice. )

  • When it comes to rate differences, “We don’t do a good enough job of dollarizing the difference.”—Mauris 

    (That’s where a broker calculates the payment difference between him/her and the competition, and compares that to what they propose to save the borrower through effective mortgage planning, regular mortgage reviews and so on.)

On selling value:

  • Less experienced brokers lose deals because they “don’t explain what brokers do.”—Thomas 

    (Sell your unique services as a broker, he said.)

  • “Everyone walks in for a Kia and hopes they leave with a Mercedes…What the heck do you go to a broker for if you don’t want advice?”—Leedham
     
  • “If there is no distinct value difference, [clients]talk about price…Our advantage is not really price (but), for the most part, brokers lead with rate.”—Beckette
     
  • “Brag about your selling proposition.”—Leedham
     
  • Mortgage-Brokers-Personal-Service“Take the time to meet with the customer.”—Thomas 

    (Nothing beats face-to-face contact for relationship building, but there’s a growing segment of consumers who are just as satisfied to save time and consult with their broker via telephone or web conferencing. Hundreds of top brokers do not meet clients in person, and they are a testament to that business model.)

  • “When our business is only transactional, it becomes about the best rate.”—Mauris

On “dead wood”:

  • “The barrier to entry in our industry is way too low.”—Mauris 
  • If you have people (agents) on your team who don’t invest in themselves, “you have to punt them.”—Mauris

    (“Take the pretenders” and get them out of the business, he added. And, to the extent that half-committed agents don’t provide knowledgeable advice and quality service, he’s absolutely right. Untrained and less-skilled individuals make far more mistakes, which hurts the public’s perception of all brokers.)

On lender efficiency:

  • lending-margins“We need to close the deal with the lender we brought it to.”—Thomas

    (As brokers, for our own sake, we must make our best efforts to avoid cancellations. But lenders also have to realize that mortgage commoditization and Internet shopping could increase cancellation rates. It’s our strong sense that lender and broker loyalty are slowly fading. It may take broker exclusivity contracts and client cancellation penalties to reverse this trend, and those are a turnoff to some borrowers.)
     

  • “Pulling rates last minute and going into [another lender’s] quick close is poison.”—Mauris 

    (All the panelists would agree that efficiency is essential for keeping lenders committed to the broker channel.)

On CRM:

  • As brokers, “we need to be good at customer relationship management…Once you have 200 or 300 clients on your books, you don’t need anymore.”—Leedham

     (Happy clients are the most powerful referral sources.)
     

  • “If you’re not using CRM by now, you’re in trouble. Banks have built their businesses on retention.”—Mauris

On this and that:

  • “We as mortgage professionals have an attitude problem…The problem is that we don’t believe the client relationship is ours.”—Beckette
     
  • “We need one name for brokers (nationwide)…Then we’d stand a better chance of them knowing who we are.”—Dreyer 

    (Most in our business would emphaticallyagree with this statement. Consumers know the term “mortgage broker.” Other titles that provincial regulators force us to use—“sub-mortgage broker,” “mortgage associate,” “agent,” etc.—mean little to the public. That makes it harder for the industry to create awareness, causes confusion for consumers who deal with interprovincial brokers. This is a key issue that CAAMP has spearheaded.)


CAAMP TV

Some 1,200+ people watched CAAMP TV last week. During last Monday’s broadcast, I had the pleasure of sharing a panel with Hali Strandlund (Fisgard), Kathy Gregory (Paradigm Quest) and Jim Murphy (CAAMP).

Some of the topics included:

  • Mortgage rules and their industry impact
  • Using “Accredited Mortgage Professionals” as the one name for brokers across the country.
  • Online mortgage trends, and more…
 
 

Rob McLister, CMT

 

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