Effective this month, National Bank will be utilizing a third-party model in providing its branded mortgages, specifically through the mortgage process outsourcing firm Paradigm Quest. The closure of the Bank’s broker-mediated distribution has left Scotiabank and TD as the last of the Big 6 to sell mortgages through brokers.
In a recent contribution for The Globe and Mail, RateSpy.com founder and intelliMortgage planner Robert McLister stated that the Bank’s move offers a look at how the industry would conduct its business in as little as half a decade from now.
“Most homeowners will start their rate shopping online. Why? Because it’s fast and convenient. Mortgage websites that appear highest on Google will get the most traffic and set consumers’ rate expectations,” McLister predicted.
“All lenders, not just online lenders, will have to pay attention to what’s happening online. That will ratchet up rate competition to yet another level.”
Brokers will still have a place in this landscape, however, as they will prove instrumental to those who prefer alternative lending avenues.
“The best deals often come from big bank challengers. Brokers will always be invaluable for consumers who don’t want to compare rates themselves, or who can’t get approved by a bank. With all the recent government rules, some lenders now have eight different rates for a 5-year fixed mortgage,” McLister wrote.
“Experienced brokers will continue helping folks sort out which of those rates translates to the lowest cost of borrowing, given the ever-growing array of penalties and rate restrictions.”
And all the time, banks will remain in the broker channel (albeit indirectly) to stay profitable.
“The National Bank news reflects a mortgage market that’s evolving faster than at any time in its history. The good news is that e-mortgages will force more competitive rates. The trade-off is, you’ll increasingly need to do your own mortgage research, or pay a premium for independent ‘full service’ mortgage advice.”
National Bank’s abrupt dissolution of its broker division is but a portent of what the mortgage brokerage sector can expect in the next few years, according to an industry veteran.