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Despite sounding like the proverbial broken record player, these are turbulent times – and it’s been that way for Canada’s mortgage market for well over two years.
With the chaos of the pandemic largely behind us, borrowers are now battling rising interest rates, softening house prices (TD Bank expects a 20%-25% fall from this year’s peak by the first quarter of next year), and a possible recession on the horizon.
Financial services firm Desjardins Group said in its August 2022 report that it expects a mild recession for the Canadian economy in the first half of 2023. This forecast has pushed lenders to become increasingly cautious with their policies. Clients need solid mortgage advice and so throughout this year, the relationship between lenders and brokers has never been more important.
Now in its 16th year, the annual Brokers on Lenders survey gives Canadian brokers the chance to evaluate the performance of the lenders they work with. In a complex housing market, the need for swift communication, strong BDM support, and flexibility from lenders is vital to the smooth running of a broker’s business. As well as rating Canada’s lenders across a range of different metrics, brokers also had the chance to discuss the biggest challenges they’ve had with a lender’s service over the last 12 months, the areas where they perform the best, and potential areas for improvement.
“We believe and recognize that the industry requires a methodology that not only meets the echoed ‘common sense approach’ from lenders, but one that surpasses the expectations of brokers and borrowers”
Steve Kissuk, Strive
This year, lenders managed to increase their scores in almost every category compared to 2021. The most significant increases were in turnaround time, underwriter support, broker support and overall service levels, suggesting that lenders have significantly upped their game in response to a pressured environment.
Brokers recorded a minor drop in satisfaction for interest rates – not an unexpected development given the overall rising interest rate environment, and satisfaction levels still remained above 2020 levels.
All of the 11 winners scored a medal in at least one category this year, reaffirming the effort and dedication that has gone into providing an excellent experience for brokers and their clients.
Although the housing market is showing signs of a cooldown, with sales slowing by 31% across the country, brokers are still seeing indications of a busier fall market approaching, according to Desjardins Group. Realtor partners have recorded recent upticks in activity, with more viewings showing on their listings, and brokers are expecting their market to speed up in response. Therefore, quick and efficient communication from lenders is going to be vital over the next six months.
The satisfaction rating for turnaround times stood at an average of 4.31 this year – a significant increase from 3.97 in 2021, and the highest increase in satisfaction across all categories. This suggests lenders have been focused on speeding up turnaround times over the last 12 months, and brokers are seeing the benefits.
Strive won the gold medal for turnaround times this year, and according to CCO Steve Kissuk, the key to its success is never losing sight of the ultimate goal – each borrower’s unique journey into home ownership.
“We believe and recognize that the industry requires a methodology that not only meets the echoed ‘common sense approach’ from lenders, but one that surpasses the expectations of brokers and borrowers,” Kissuk told CMP.
“The underpinning to our business is service. Easily overstated, but it runs in every facet of our organization and is truly embedded in our cultural framework.”
“We believe we are a team of sensible and practical people that take the time to hear the details, who are relentless in servicing our broker partners, and understand that we must strive beyond the call of duty,” Kissuk adds.
“We celebrate fundings weekly, and supporting a borrower’s journey to homeownership is an exciting event to be a part of. Lose sight of this, and you’ve already lost.”
Strive also scored highest in underwriter support, overall service levels and satisfaction with credit policy, winning the silver medal in the overall rankings. Radius Financial took the gold with top scores in four categories, and RFA won the bronze medal.
According to Kissuk, the broker channel brings “immeasurable value” to the Canadian lending landscape, and so investing in this channel is a no-brainer for Canadian lenders.
“With market uncertainty and volatility, we believe that the future of the broker channel, both traditional and digital adopters, will be critically important in the long term,” Kissuk says.
“That is why it is the only channel we pursue.”
“We have all experienced significant life events at some point—we’re only human. We are honoured that we get to be real-life financial allies every day”
Jason Provencher, Bridgewater Bank
This year, the rankings have been split into two categories – mainstream lenders and alternative lenders.
Hosper Mortgages was rated the top alternative lender this year, with top scores across all 10 categories and an overall score of 48.1 out of 50. Haventree Bank came in second, and Bridgewater Bank took the bronze, with a top score in BDM support – tied at 4.9 with Hosper Mortgages.
With the ability to be more flexible on loan criteria, alternative lenders are proving to be a popular choice across Canada as the borrowing environment grows increasingly tough. However, competition among alternative lenders is high, and so the need to provide outstanding communication and support can’t be overstated.
According to Bridgewater Bank’s vice president for national sales Jason Provencher, the key to offering exceptional BDM support is simple – and it all starts with cultivating the right culture internally.
“I do think we scored well here because of our culture – it’s called TYLF – treat you like family and friends,” Provencher says.
“Everyone at the bank really lives it. Ask anyone to lend a hand, and they’ll go the extra mile every time with respect, familiarity, good humour and care.”
“The same goes for our BDMs,” he explains. “Alternative deals are often complex, so we really take the time to work on solutions with our brokers. We want to see clients in homes just as much as they do. We have all experienced significant life events at some point—we’re only human. We are honoured that we get to be real-life financial allies every day.”
Provencher notes that there are also things that brokers can do to help lenders work with them more easily. A great first step is to simply give their BDM a call before submitting a file, which will offer both sides the chance to talk through the deal and discuss any potential issues.
He says that brokers should also take the time to explain anything that isn’t in the paperwork with some informative deal notes, as this will save BDMs from having to come back to them again with queries.
“Every file has a story,” Provencher says. “Applications with good deal notes help us understand the grey areas, so that underwriters can make decisions quickly.”
“We celebrate fundings weekly, and supporting a borrower’s journey to homeownership is an exciting event to be a part of. Lose sight of this, and you’ve already lost”
Steve Kissuk, Strive
In addition to ranking Canada’s lenders, brokers were also asked about the biggest challenges they’ve faced with a lender’s service over the past 12 months, as well as the best thing a lender has done for them over that time.
Despite showing a clear improvement in the rankings year on year, turnaround times, speed of responses, and the amount of time taken to review documents were identified most commonly as challenges. This suggests that despite improvements, brokers still face some anxiety about the speed of the overall borrowing process and would like to see further improvements over the next year.
It’s not all bad news, as a significant chunk of broker respondents said they hadn’t faced any issues at all with lender services – fantastic feedback for an industry under significant pressure.
When asked about positive experiences, the vast majority of respondents praised a fast and efficient service, quick responses to complicated deals, same-day approvals, and flexibility in lending criteria. One broker particularly praised “logic-based approvals, and going above and beyond to fight for the merits of a deal,” while another praised their underwriter’s ability to “find ways to make the deal work.”
When discussing potential improvements, a number of brokers mentioned interest rates as a pain point. Some wanted more education on lending products, while others suggested improving technology and upgrading broker portals.
The overall responses from this year’s Brokers on Lenders survey clearly show that lenders have put in massive amounts of effort to improve their service offering and create an excellent experience for broker clients. Responses were more positive across every category compared to last year, with many brokers having only good things to say about the lenders they work with – an optimistic sign in what promises to be a difficult market for years to come.
To uncover the best lenders in the eyes of Canada’s broker community, CMP reached out to brokers across the country, asking them to rate the lenders they work with across 10 key areas, including turnaround time, interest rates, product range, broker support, overall service levels, and more. As in previous years, CMP also asked brokers to weigh in on important aspects of the broker-lender relationship, such as how commissions and bonuses might change and why they choose to send deals to the banks rather than monoline lenders.
For each category, lenders were ranked in order of merit according to an average score calculated from the ratings they received from brokers. The top three lenders and alternative lenders in each category received a gold, silver or bronze medal. Lenders’ combined average score from all categories determined the overall gold, silver and bronze medalists.
54.9% of respondents said past clients were their strongest referral partners
40.5% of respondents have been brokers for 11+ years
28.9% of respondents said their own business was the type of deal they had with the lender