One broker believes industry players will continue to be necessary when it comes to the mortgage industry.
Reports of the broker industry’s death have been greatly exaggerated, according to one industry player who believes there will be a place for brokers as long as there is competition among lenders.
“If there are [at least] two lenders they’ll try to widen the margins and we’ll have choices with the competition between them and there is going to be value in knowing who is offering the best deal,” Layth Matthews of RateMiser told MortgageBrokerNews.ca. “In the information age you could check the available rates … but there is just always more people offering new and innovative solutions, so I don’t think mortgage brokers are going away anytime soon.”
Technology may be encroaching on broker business and, in some cases, shrinking profits, but Matthews argues nothing will replace the human interaction and the expert advice mortgage brokers are able to provide.
Indeed, several other industries have dealt with similar prognostications for ages.
“Every broker – whether you’re a travel agent, a stock broker, whatever – there is always predictions of your demise,” Matthews said. “As technology progresses it picks up some of the value that you provide. You could see it as a threat but I think it’s more realistically understood as the necessity to progress.”
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The conversation was sparked by one anonymous MBN reader, who claimed the broker channel is unsustainable, citing eroding profit margins for lenders paying out on broker-originated deals.
“Brokers in Canada get paid their commission no matter what the profitability ratio of the product they are selling is. They do not take a hit like the lender does when margins narrow, and any lender who even contemplates having brokers share that pain is ostracized by the broker community,” writes “M. Robertson” a regular commenter on MortgageBrokerNews.ca. “The reality? The broker channel as it exists today is unsustainable. In almost every other country in the world there has been change because of this and it means that brokers in Canada better watch out because it will come to Canada too. It is only a matter of time.”
But as long as there is competition among lenders, brokers will have a role to play, according to Matthews; as long as there is competition, clients will seek the best rate and brokers will help them do that.
“Lenders incentive structure is to widen the margins between the rate at which they’re paying the money and the rate at which they’re lending the money,” he said. “The role of the broker is to keep that margin reasonable and that’s what we do; we basically keep the market efficient.”
“If there are [at least] two lenders they’ll try to widen the margins and we’ll have choices with the competition between them and there is going to be value in knowing who is offering the best deal,” Layth Matthews of RateMiser told MortgageBrokerNews.ca. “In the information age you could check the available rates … but there is just always more people offering new and innovative solutions, so I don’t think mortgage brokers are going away anytime soon.”
Technology may be encroaching on broker business and, in some cases, shrinking profits, but Matthews argues nothing will replace the human interaction and the expert advice mortgage brokers are able to provide.
Indeed, several other industries have dealt with similar prognostications for ages.
“Every broker – whether you’re a travel agent, a stock broker, whatever – there is always predictions of your demise,” Matthews said. “As technology progresses it picks up some of the value that you provide. You could see it as a threat but I think it’s more realistically understood as the necessity to progress.”
#pb#
The conversation was sparked by one anonymous MBN reader, who claimed the broker channel is unsustainable, citing eroding profit margins for lenders paying out on broker-originated deals.
“Brokers in Canada get paid their commission no matter what the profitability ratio of the product they are selling is. They do not take a hit like the lender does when margins narrow, and any lender who even contemplates having brokers share that pain is ostracized by the broker community,” writes “M. Robertson” a regular commenter on MortgageBrokerNews.ca. “The reality? The broker channel as it exists today is unsustainable. In almost every other country in the world there has been change because of this and it means that brokers in Canada better watch out because it will come to Canada too. It is only a matter of time.”
But as long as there is competition among lenders, brokers will have a role to play, according to Matthews; as long as there is competition, clients will seek the best rate and brokers will help them do that.
“Lenders incentive structure is to widen the margins between the rate at which they’re paying the money and the rate at which they’re lending the money,” he said. “The role of the broker is to keep that margin reasonable and that’s what we do; we basically keep the market efficient.”
