CMHC recently released the results of their annual Mortgage Consumer Survey. The survey included 3,510 recent mortgage consumers in Canada. Of them, 55% had undergone a renewal, 20% refinanced, and 22% purchased a home using mortgage financing.
This article outlines some key insights that are critical to mortgage brokers in Canada.
- Mortgage broker market share is rising
- Mortgage brokers are not contacting clients before their renewal date
- Mortgage brokers are not following up with clients after the transaction
Mortgage Broker Market Share
First and foremost is the market share of mortgage brokers – a popular topic. There has been some concern that mortgage brokers were losing some share to mortgage specialists that work directly for banks. Results from CMHC’s Mortgage Consumer Survey refute that, however:
- Prior to 2014, mortgage broker’s market share was actually quite steady. They consistently garnered around 46% of first-time homebuyers and were managing to gain traction with repeat buyers;
- 2015 results (which track mortgages issued during the 12 months prior to March 2015) indicate that mortgage brokers notably increased their market share among first time homebuyers. This is crucial, because these represent long-term customers;
- Compared to a decade ago, mortgage brokers have doubled their market share among first time homebuyers, going from just 28% in 2005 to 55% in 2015; and
- Repeat buyers are also using mortgage brokers much more frequently and renewals (not shown in the graph above) have gone from just 8% in 2005 to 21% in 2015.
Other Useful Insights for Mortgage Brokers in Canada
- While mortgage brokers do a much better job of post transaction contact compared to bank reps, there remains a lot of space for improvement – only half of respondents that used a mortgage broker were contacted after the transaction
- Post transaction contact increases retention – just 36% of clients that were NOT contacted after the transaction “totally agreed” that they will likely use the same lender/broker while 55% of those that WERE contacted “totally agreed”
- Only 23% indicated that they were contacted by their mortgage broker in advance of their renewal date!
- Most respondents that were contacted prior to their renewal chose to renew early. 55% of early renewals were to avoid a perceived increase in rates. While we don’t feel this is particularly likely in the near term, most banks would disagree. Though it is clearly to their benefit to do so.