Alternative lenders beat up big banks

_{By Donald Horne | 05/03/2013 8:00:00 AM | 1 comments}

 
 http://www.mortgagebrokernews.ca/news/breaking-news/alternative-lenders-beat-up-big-banks/171493/

Alternative lenders were the clear winners from last year’s mortgage rule changes, seizing the lion’s share of consolidated volume from the big banks.

 

Home Trust and Equitable Trust led the charge in volume with dramatic increases. Equitable Trust had an incredible 2012, as consolidated volumes increased 52.3 per cent over 2011, buoyed by a strong Q4 2012, up 29.6 per cent over the same period the previous year.

 

“The mortgage bank segment continues to realize growth in the channel,” reads the D+H Q4 2012 Market Share Report. “Funded volumes in the channel for this segment increased by 30.8 per cent as at Q4 2012.”

 

Home Trust saw a year-over-year increase in consolidated volumes of 7.7 per cent, riding the wave of a great fourth quarter in 2012, racking up an 18.5 per cent increase over the same quarter in 2011.

 

The changes made back in June to the rules for mortgage insurance had a telling effect on the big banks – the key change limiting the amortization on insured mortgages to 25 years. It was expected that the changes would have brokers moving clients to monolines and alternative lenders – and the numbers have borne that out.

 

The big banks’ consolidated volumes dropped to 45.8 per cent of market share from 54.7 per cent in 2011, while mortgage banks increased their share to 39.3 per cent for 2012 from 30.2 per cent.

Non-conforming lenders and credit unions remained relatively steady for 2012 at 12.7 per cent and 2.2 per cent market share respectively. Unable to match the growth of alternative lenders, it is indicative of the need for credit unions to continue to beat the drum for brand presence in the market.