MCAP going after the Big Five
Mortgage lender MCAP is taking direct aim at the big banks, with bonuses for brokers bringing in clients who would otherwise renew or refinance with the Big Five.
“We are taking the lead by launching the first, of what we hope will be many initiatives aimed at growing mortgage broker market share,” said Ron Swift, president of MCAP Service Corp. “We invite other lenders to join forces with us to support the mortgage broker channel and increase market share by targeting customers currently using the banks and other non-broker channels.”
The lender’s initiative will extend brokers an additional five basis points in commission on switches and refinances from banks. To be eligible, mortgages must fund with MCAP by June 30, 2011.
MCAP bills the bonus as a way of offsetting broker costs in acquiring the new business, but also a way of encouraging them to stay connected with clients long after the initial origination. Another goal is to inject new borrower blood into the non-bank lending market.
“I think it’s a phenomenal idea,” Wayne Goulding, a broker with Dominion Lending Centres – Forest City Funding, told MortgageBrokerNews.ca. “It’s also an acknowledgement of just how difficult it is to get a borrower to leave a lender for another when it’s time to renew or refinance.”
According to a recent study commissioned by CAAMP, nearly two-thirds of Canadians at least consult brokers for their first mortgages, but only about 27 per cent use them to refinance. A mere 21 per cent turn to brokers for renewals.
That has a knock-on effect for non-bank lenders largely dependent on brokers to send mortgage business their way.
MCAP is asking brokers to be more aggressive in growing the sector’s market share by taking business from “lenders who do not support the mortgage broker channel as this would represent real market share growth for the broker channel.”
Growing broker involvement for renewals and refinances should also accrue to the client’s benefit.
The study, conducted by Maritz, shows that those renewing or renegotiating with a broker’s help reported a decrease of 1.4 points, compared to 1.0 among all renewals.
“I congratulate MCAP for taking this step, and coming up with an initiative to stimulate greater broker awareness,” Mark Kerzner, president of TMG The Mortgage Group Canada told MortgageBrokerNews.ca.” It’s fitting because brokers represent the best alternative for consumers seeking home financing.”