If you want to know how mortgage lenders are performing in today’s volatile market, who better to ask than a mortgage broker?
Well, that’s exactly what Bond, a customer experience, loyalty, and growth firm, did in partnership with Mortgage Professionals Canada for its seventh annual Broker Loyalty & Lender Performance Study.
Over 600 mortgage brokers and agents were surveyed, providing valuable insight into where they see lenders serving them and their clients well, while also highlighting certain pain points in the mortgage process. The study evaluated over a dozen A-lenders and 10 B-side lenders, with the results highlighting where lenders are excelling, as well as areas that could use some improvement.
“Brokers have had to navigate their way through various challenges over the last few years, and further challenges are expected this year. However, brokers are a resilient group,” Anthony Greco, Director of Experience Insights & Measurement at Bond Brand Loyalty, told CMT.
He said that while some brokers are bracing for a tough year in terms of business volume, many confirm they will take this opportunity to improve their business operations to become more competitive when economic conditions turn more favourable.
“They also recognize that the services they bring to the market are needed more than ever,” Greco added. “So, there’s definitely reason for optimism going forward, and if there’s anything we’ve learned from brokers in the 10+ years we’ve tracked the sector, it’s that they always find a way to stay relevant.”
We’ve gone though the report and have picked out some of the key findings below.
Who are brokers’ favourite lenders?
The A-side lenders that received the top overall scores and are most likely to be recommended, include:
First National; and,
On the B-side, brokers awarded top scores to:
CWB Mortgages; and,
All of the lenders included in the survey were rated on the functional elements of their business, as well as their brand personality and the emotional connections they are perceived to have with brokers and clients.
Some were found to be excelling in things like product offerings, professionalism and support and services, while others were found to be lacking in areas such as turnaround times, consistency of service and ease of approvals.
A-side, B-side and private lenders: latest trends
Brokers report that the amount of A-side business they are doing (72%) has been trending down back to historical norms. While that’s down from a high of 77% in 2020, it’s on par with levels seen in 2019.
As a result, brokers are reporting sending slightly more business to B-side lenders (18%). That’s up from a low of 15% in 2020, but also back to normal pre-pandemic levels.
And despite concerns in the media about the prevalence of borrowers turning to private borrowers, the percentage of broker deals being sent to private lenders (9%) remains unchanged from 2021. That’s up from 8% in 2020, but also on par with 2019 results.
How are A-side lenders performing?
When it comes to functional drivers of loyalty, Bond reports that lenders are performing on average.
Bond notes that “functional” drivers of loyalty, such as ease of getting a mortgage, customer service, etc., have risen in importance in this year’s report and now account for just over half of the decision of whether to recommend an A-side lender.
“Approvals (ease and turnaround time), service consistency, and underwriter relationships are the most important functional elements,” the report noted.
When rating their top emotional connection elements, brokers had mixed feelings. A majority said their lenders make them feel confident, but having feelings of stress and anger came in at number two and three in terms of importance.
“Brokers are feeling stressed (the second-most important emotional driver) and nervous with many lenders, while also perceiving many as difficult and inflexible,” the report reads.
How are B-side lenders performing?
For B-side lenders, having a strong emotional connection has overtaken brand personality in determining if brokers will recommend specific lenders.
The report shows many B-side lenders have room to improve, with recurring feelings of anger and stress significantly influencing broker loyalty. While B-side lenders do a relatively good job at coming across as easy to deal with and professional, many are perceived by brokers as being difficult and out of touch.
“Most B-side lenders are struggling with ease of approval and turnaround times,” the report reads. “Lenders also struggle with minimizing stress, a top emotional driver of loyalty.”
What brokers are—and aren’t—willing to compromise on
One of the more interesting findings from this year’s survey was the response when brokers asked what kind of premiums they would be willing to pay to work with a preferred lender.
Fewer broker perks (33%) was the top-cited benefit they would compromise on, followed by approval time (29%) and compensation (27%). But few brokers were willing to compromise on features that typically prove more important to customers, such as rates (17%) and product features (8%).
How many lenders do brokers deal with on average?
After declining for several years, the number of lenders that brokers deal with increased in 2022 to an average of 6 on the A-side (up from 5.5 in 2021) and 2.9 on the B-side (up from 2.4 in 2021).
Which technology platforms do brokers use most?
There’s been an arms race in the mortgage industry when it comes to technology platform providers, with various deals and feature announcements over the years. But which do brokers favour most?
Asked which technology provider they’ve used in the past 12 months, Filogix, a Finastra company, which bills itself as the “technology hub of the Canadian mortgage industry,” was the response given by 79% of brokers. Another 31% of brokers said they had used DLC Group’s Velocity and 20% cited M3 Group’s mortgageBOSS platform.
Asked for their primary point-of-sale system, 52% of brokers cited Filogix, 24% said Velocity and 9% named BOSS.
How have current economic conditions impacted mortgage business?
Asked how brokers expect their business to be impacted by current high inflation and high interest rates, the overwhelming majority (91%) said they expect a decrease in purchase volumes, with 57% expecting a “significant” decrease and 34% expecting a “slight” decrease. Just 5% say they expect an increase in purchase deals.
A third of brokers (33%) expect no impact to their renewal business, while nearly an equal percentage (30%) anticipate a slight decrease. Another 17% think they will see a “slight” increase in renewals while 6% expect a “significant” increase.
Opinions were more evenly split in terms of how refinance business is expected to perform, with 38% expecting an increase in business and 53% forecasting a decrease in refi deals.
What are the biggest threats to broker business?
• Current economic conditions: 79%• Government regulations (provincial or federal): 47%• Housing market slump: 32%• Direct-to-consumer through online lenders: 26%• Direct-to-consumer from major lenders: 25%