Mortgage brokers gaining popularity: no longer choice of last resort.
April 26, 2004 - Canadians are slowly coming around to the fact that mortgage brokers are not the last resort for clients who can't secure a mortgage with their bank.
An increasing number of homebuyers in this country, about 26 per cent, are heading to mortgage brokers to finance their purchase, says a new survey by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL). That’s a significant jump from just a few years ago when mortgage brokers were the lenders of choice for only about nine per cent of Canadians who needed a mortgage.
Mortgage brokers say the public is learning that anyone, not just those with bad credit, can use their services. The industry pledges to find the best interest rates by shopping around at dozens of financial institutions. And, for most homebuyers, mortgage brokers are free of charge since banks pay brokers a "finders fee" for bringing in new clients.
"The broker has become an acceptable choice," says Colin Dreyer, president of CIMBL. "If you want to shop the market, you go to the independent mortgage professional."
Dreyer says today's low mortgage rates have helped educate consumers about real estate in general and mortgage brokers in particular.
Despite the increasing awareness, the Canadian industry still has a lot of work ahead. The vast majority of Canadians still pay a visit to their bank when they are buying a home. In the U.S., by contrast, nearly 70 per cent of homebuyers use a mortgage broker, according to Dreyer.
Mortgage brokers also have to take aim at public perception of the industry. The 2003 CIMBL study found only half of mortgage consumers had a positive attitude towards brokers. About 20 per cent had a "somewhat negative attitude."
One out of five people in the study didn't agree that "mortgage professionals act in a responsible and ethical manner." Eisner and others say the problem is the old view that brokers only deal with the bad credit client.
"It's about convincing them to get over the hurdle, that it's not a negative concept," he says.
The Canadian Institute of Mortgage Brokers and Lenders believes part of the answer is raising the educational and accreditation standards for the profession. The association recently launched a new designation, the accredited mortgage professional. The criteria for meeting the designation will continue to become more "stringent" over time, said Dreyer.
© Copyright 2003 The Ottawa Business Journal