Posted On Jan 18, 2024

(First published January 17, 2024)

With over 30 years of experience in the financial services industry, including working at a Big Bank in Canada and most recently building and launching one of Canada's first digital mortgage lenders, I have had a unique vantage point in the world of mortgage financing. This journey has provided me with invaluable insights into the intricacies of lending, the evolving needs of Canadian borrowers, and the ever-changing landscape of the mortgage industry. Today, I want to share my perspective as a true insider and expert in the field and explain why I believe that the future (and present) of mortgage lending lies in the hands of Mortgage Brokers.

The Digital Revolution in Mortgage Lending

In recent years, we've witnessed a significant shift towards digitalization in the mortgage industry. From online applications to automated approval processes, the convenience of digital platforms has transformed the way Canadians engage with mortgage lenders. However, having been in the trenches of this digital transformation, I've come to realize that while technology is essential to deliver a more seamless and transparent experience, it cannot stand alone and it should be "augmented" by human mortgage experts.

Why Human Mortgage Experts Are Essential

One of the key lessons I've learned is that purchasing a home is a significant and often stressful transaction. Borrowers face a multitude of options, complex financial assessments, and the daunting task of getting their unique applications approved. As risk tolerances and requirements for lenders vary, and credit-worthiness examined at an ever-more detailed level - it's become clear that automated adjudication alone may not be sufficient (perhaps not even possible except for those very cookie-cutter deals - the likes of which are becoming more and more infrequent).

Every borrower's situation is unique, and there are emotional considerations involved in such a significant lifetime investment. This is where human mortgage experts shine. They offer personalized advice, tailored solutions, and a comforting presence in the midst of tough financial decisions that affect us as humans. As a seasoned expert, I've made the shift from behind-the-scenes to working directly with clients because I am driven by a desire to help them succeed financially, especially when it comes to their most important asset – their home.

The Power of Mortgage Brokers

Joining the Mortgage Broker channel was a strategic move for me, and it's a decision that aligns with the current and changing dynamics of the Canadian mortgage market where Mortgage Brokers are estimated to account for 40-50% of mortgage originations in Canada, capturing a larger and growing share of the market over the past two decades. Here's why I believe Mortgage Brokers are positioned to thrive:

  • Rate Competitiveness: Technology platforms that aggregate mortgage rates have empowered brokers to present multiple financing options to borrowers efficiently. This not only saves time but also ensures borrowers have a holistic view of the market

  • Efficiency and Convenience: Digital application platforms have streamlined the process, allowing brokers to create a single application submitted to different lenders, a significant efficiency improvement that borrowers appreciate

  • Younger Generation and New Canadian needs and preferences: Millennials, Gen Z, and new immigrants are increasingly turning to Mortgage Brokers due to their technological prowess and the need for expert advice. While younger digitally-savvy borrowers utilize and value rate-aggregation platforms for rate-shopping (and realize the value of access to all varieties of lenders), they often rely on brokers for application handling due to product complexity, complexities of their own personal situation (such as light or new credit files) and the emotional significance of homeownership

  • Prospective Borrowers Value Advice: Borrowers rightfully perceive Mortgage Brokers as independent third parties, providing tailored and objective recommendations. Advice is a key driver in the strength of the relationship with a financial service provider, often more important than where borrowers have their mortgage - which I interpret as it mattering less who the lender is, and more who the borrower is getting advice from

  • Borrowing Advice is missing from the Bank branch system:  The high turnover in branches where staff tends to be more inexperienced has left a vacuum for the advice that borrowers are seeking.  The impact of this absence of advice has been felt in the last year for borrowers who were sold variable rate mortgages in branches even if it didn’t match their risk profiles and they were never properly educated on how the product works

  • Mortgage Securitization has increased the available offering: Brokers can access a wider range of lenders, thanks to mortgage securitization programs that have increased competition in the lending market. Mortgage Brokers are uniquely positioned to access the choice for borrowers

  • Regulatory Requirements and Affordability Issues: Product complexity and affordability challenges in certain regions have made Mortgage Brokers a crucial channel for accessing alternative lending solutions.  And Mortgage Brokers are key to structuring and presenting applications the right way to satisfy lender requirements and so that the lender can get comfortable taking on the risk of lending

Conclusion

In conclusion, my transition to the Mortgage Broker channel was motivated by my belief that I can offer borrowers more value with my extensive financial services background. I am excited to leverage my experience to provide tailored advice and solutions to borrowers (many of them family and friends - and their families and friends) in need. As the mortgage landscape continues to evolve, the trend towards Mortgage Brokers is clear. By choosing the Mortgage Broker channel, you're making a wise decision that aligns with the shifting dynamics of the Canadian mortgage market. Your financial future is too important to leave to chance, and with the guidance of a trusted expert, you can navigate the mortgage landscape with confidence.

 

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