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Recent CMHC 2010 Survey numbers explored

General Angela Calla 3 May

CMHC Survey – Revisited

TORONTO, May 4 /JAC/ – The recent CMHC “The 2010 Mortgage Consumer Survey” provides some interesting numbers relating to lender loyalty at renewal time and mortgage broker market share, with more than half of British Columbia home buyers utilizing the services of a mortgage broker.

The Survey in itself makes worthwhile reading and provides some interesting insight about the mortgage business, so JAC News drilled-down a little further with CMHC and industry experts.

“It is very encouraging to see home buyers increasingly seek the services of mortgage brokers for what most Canadians feel is the most important purchase of their life – their new home”, confirms Garth Ellis, AMP, President, Verico Ellis Mortgages Canada.

Highlights of the Survey, originally released by CMHC and published by Canada Mortgage Magazine on April 26th, include 45% of first-time home buyers and 33% of repeat buyers using a mortgage broker in the last year, compared to consumers refinancing at 23% and those renewing at 13%.

The survey shows that 88% of those renewing and 70% refinancing used the same lender: “Lender loyalty is less prevalent among the buyer segments. Just under half (46%) of first-time buyers took out their mortgage with the institution they were dealing with at the time (similar to last year) while 58% of repeat buyers did not change lenders when obtaining their most recent mortgage”.

JAC News asked Paul Grewal, AMP, President, Street Capital Financial for his opinion on why he thought that only 58% of repeat buyers stayed with the same lender. “I think repeat buyers are receiving more information from realtors and mortgage brokers on choices”, states Mr. Grewal. “Since they are openly working on a transaction, more products and pricing are made available to them at the point of sale”.

Of great interest within the Survey: “As seen in 2009, broker market share is strongest in Western Canada where 53% of buyers in British Columbia and 41% in the Prairies used a broker to arrange their mortgage. Also, overall, respondents who used a broker for their most recent mortgage transaction have positive perceptions of the broker they used: about eight-in-ten agree that the broker took the time to fully understand their financial situation and mortgage needs”.

Angela Calla, AMP, Mortgage Broker with Dominion Lending Centres in Coquitlam, BC offers “Getting the right mortgage advice from the onset contributes to first-time homebuyers moving up the property ladder quicker. And when renewing their mortgage with access to the best options, early retirement or obtaining more properties sooner becomes possible. It truly is a win-win and people want the best for those they hold dearest.”

JAC News followed-up directly with CMHC to confirm that indeed 53% of British Columbia respondents did use the services of a mortgage broker. Prior to being asked the questions, the respondents were provided with the definition of a mortgage broker. The definition clearly indicated that mortgage brokers are mortgage professional independent from mortgage lenders and who have access to a wide range of lenders.

The Survey noted that: “According to mortgage consumers, the benefits that mortgage brokers offer are that they are able to get the best deal or rate for their clients, they are convenient, and they offer time-savings when obtaining a mortgage. For all segments, family and friends are the key source of broker referrals, (36%). This indicates the important role clients’ family and friends play as a referral source for mortgage brokers, as well as the importance of word-of-mouth referrals”.

“We are encouraged by the results of the latest CMHC survey and would like to thank CMHC for their ongoing support of the mortgage brokerage industry across Canada”, states Martin Marshall, CPMA, on behalf of The Independent Mortgage Brokers Association of Ontario.

“While the results of this survey are encouraging for mortgage professionals, especially in the areas of first time and repeat buyers, we clearly have some work to do to capture more of the refinance and renewal markets”, continues Mr. Marshall, who sits on the IMBA Board as Chair, Communications. “Both of these market segments represent significant growth possibilities for our agents and brokers and IMBA will continue to work on behalf of our members to provide ideas that they can use to grow their businesses within this market.”

Consumers are “most-likely searching the internet and talking to friends and family, hence the shopping behavior”, concludes Mr. Grewal.

That certainly backs up the other aspect of the CMHC survey, previously reported by JAC News, about internet usage among homebuyers.

Mr. Ellis provides a further point about consumers renewing with lenders. It may not necessarily be automatic and in many cases a mortgage broker may still be involved. “We might want to consider that many consumers do actually consult with a mortgage broker before finalizing their refinance and renewal transactions. In many cases, the mortgage broker is fully involved in the process and works with the existing lender to refinance the mortgage and to ensure that the best possible mortgage is secured for the client”.