The announcement Mortgage Architects has now acquired Argentum is strong indication the mortgage pie is getting smaller, and more mergers and acquisitions are on the horizon, say brokers.
The announcement Mortgage Architects has now acquired Argentum is strong indication the mortgage pie is getting smaller, and more mergers and acquisitions are on the horizon, say brokers.
That deal is also not unexpected, says Omer Quenneville, a broker with Centum.
“I’m not surprised by this takeover; it is a sign of the time,” says Quenneville. “Most of what evolved over the past 12 years was just a product of an overheated market. You didn’t have to be good – you just had to be there. Now, with sales of real estate down 50 per cent and brokers placing clients in traps like collateral mortgages such as what TD offers, the pie is clearly getting smaller.”
But even Quenneville concedes there is room available for smaller brokerages, and that mergers of this kind are good for the channel, as a whole.
“I do feel there is room for both large and boutique or specialized brokerages, however, survival will depend upon on how well you took care of your clients,” he told MortgageBrokerNews.ca. “Not just with service, but advice as well.
“These types of mergers and acquisitions are always good for the market. Survival of the fittest – how can you disagree with that?”
Len Lane of Verico Brokers For Life agrees with Quenneville, saying that the takeover proves how hard it is to be a small brokerage in this business anymore.
“From a business point of view, if you’re not in the multi-billion dollars of mortgages funding, then it’s hard to get noticed,” Lane says, reacting to news of the announcement. “Albert and Ron are both sharp businessmen and I’m sure it was a win-win situation.”
Veteran broker Ron Butler of Verico Butler Mortgage expects more amalgamations to come – but not necessarily as many brokers remaining in the channel.
“In a shrinking market you need consolidation; I would not be surprised to see another amalgamation or two by next summer,” says Butler. “Also, fewer independents. It’s important to remember that even if there are fewer networks and super brokers, they may not end up being any bigger.
There will be many fewer mortgage brokers and agents in Canada at the end of 2013 than there were at the beginning of the year, says Butler, “so amalgamation may be the only way to stay the same size.”
