Merix Financial sent out a summary of comments made by CAAMP chief economist, Will Dunning, last week.
Here are a few of Dunning’s bullet points…
- A big factor leading up to the U.S. mortgage crisis was that 40% of American home purchases were being made for investment purposes. In Canada today, the figure is far more reasonable at 5%.
- Despite the economic meltdown, Canadian mortgage arrears are still just .40%.
- Last year, 18% of Canadians refinanced. They took out $41 billion of equity from their homes. In 2009, Dunning feels the figures should be similar.
- 41% of refinance proceeds were used to pay down debt. 29% was used for home renovations. 15% was used for investing.
According to Merix, the most important stats for mortgage brokers were these:
- This year, only 1/3 of mortgage activity was new mortgages.
- Over 2/3 of Canadian mortgage activity was renewals and refinances.
With the refinance phase coming to an end and new mortgage activity declining, Dunning said, brokers will need to be far more strategic in terms of marketing and prospecting.
Dunning also noted that borrowers generally remain with the same lender at renewal. That’s in keeping with a stat we wrote about earlier this year. According to CMHC, 90% of borrowers renewed with their existing lender: CMHC 2009 Mortgage Survey.
That’s a stat that makes repeat business a lot harder to come by.
(Partial Source: Merix Financial)
Last modified: April 26, 2017
Do you mean the closing stat makes NEW business a lot harder to come by?
Hi David,
It means that it’s harder for the average mortgage planner to get repeat business when 90% of mortgagors renew with their existing lender (per CMHC’s statistic). Many lenders have very agressive client retention departments.
Cheers,
Rob
The retension and refinance statistics only bolster my contention that mortgage professionals need to provide a broader base of services to their clients to be competitive with banks and other lenders.
As long as brokers insist that our major advantage to clients is our ability to get them lower rates, our industry will not make major inroads on the retention business.
In addition, the whole concept of “shopping” the market for better rates on behalf of lenders is pretty thin, considering that most brokers place the majority of their “A” business with one or two lenders, in order to maximize their performance bonuses and ensure quick response from their underwriters.
The marketplace is pretty smart, and if Canadian brokers are to make serious inroads into renewals and refinancing we will have to do something different than done presently, at least by most brokers.