Despite the financial crisis, private mortgage brokers are likely to remain a viable option and maintain strong market share in Canada’s mortgage market versus the big banks and other financial institutions.
A Deloitte report suggests mortgages provided by non-bank providers will likely account for approximately one-third of all mortgages in Canada for the foreseeable future. According to the Canada Mortgage and Housing Corporation (CMHC), mortgage brokers represented 38% of total mortgage originations in 2009, up from 26% in 2003.
Part of this may be due to support by some of the big banks. The CMHC study found that about half of their 2009 mortgage volume was from three of the “big six banks” active in the mortgage broker channel.
Canada’s mortgage market will remain relatively stable compared with the U.S., which has seen its mortgage broker market collapse.
According to the U.S.-based National Association of Mortgage Brokers, mortgage brokers previously originated nearly two-thirds of all U.S. mortgages. By 2010, U.S. broker share declined to only 15%, primarily because mortgages were provided to unqualified applicants or homeowners who borrowed more than they could afford.
Other reasons included creating mortgages with unrealistic rate resets, inaccurate ratings from credit rating agencies and lax regulation.