Pillar Financial Services recently surveyed more than 100 mortgage brokers about their clients’ experiences when seeking a mortgage – and every single one had something in common.
Rejection, pure and simple, is generating a large client base for mortgage brokers, observes portfolio manager and senior advisor and founder of W.A. Robinson Asset Management Ltd. Wayne Robinson, from the 2014 survey of Ontario brokers.
“The survey confirms that clients come to Pillar because we are able to handle exceptions that traditional lenders cannot – or will not,” says Robinson. “We know these folks well. We know that they get eliminated for reasons that are overly restrictive.”
According to the survey, there are three core insights about the typical Pillar client:
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Many Borrowers Face Repeated Rejection
- 100% had clients who were declined financing more than once by a bank;
- 66.25% had clients who were turned down more than once by credit unions; and
- 61.84% cited “other financial organization” as a source of multiple rejections.
“Not only do clients face a brick wall when seeking mortgages from conventional sources,” says Robinson, “they face many.”
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Self-Employment is a Big Barrier to Mortgages
So why were these applicants told no?
“More than two-thirds (64.23 per cent) offered more than one reason,” says Robinson. “But for almost half (45.53 per cent), one reason alone was enough: they couldn’t prove their income to the institution’s satisfaction.”
This fact is interesting on its own but more so when it’s compared with another: brokers categorized 31 per cent of their clients as self-employed, he says.
“Self-employed individuals are more likely to run into speed bumps when seeking a mortgage because they may have difficulty proving their income.”
