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National Bank’s shelving of broker-mediated selling offers a glimpse into the future

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Ephraim Vecina | 07 Dec 2016, 08:15 AM Agree 0
“E-mortgage” model will ratchet up competition in as little as five years, industry veteran predicts
  • | 07 Dec 2016, 09:57 PM Agree 0
    CIBC (Firstline), BMO, HSBC, ING and National Bank have exited the origination channel for mortgages sourced from mortgage brokers. Canada's largest FI, RBC was never there...Scotia and TD are the last chartered banks in this space but rumour has it that one of these banks is considering a similar decision to pull out.
    Enter the new Federal mortgage rules which will impact the ability of monoline lenders to securitize their portfolios, thus limiting their future ability to compete with the banks on rate...While rate is not the only reason why a consumer would use the services of a mortgage broker, if we are all being honest with ourselves, it is likely the strongest value proposition for this channel.
    The banks have agreed to shoulder some of future default risk so not to cripple CMHC and the private insurers... when rates increase and presumably when defaults increase resulting from overextended borrowers not being able to carry higher payments. One has to wonder if the banks had a few conditions for the Feds before agreeing to spread the risk?
    It appears that dark clouds are on the horizon for mortgage brokers...
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