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Macquarie Financial to leave Canadian broker channel
As far as I’m concerned, they were gone a long time ago. For a while they were so picky as to who they would work with that they had already cut off half the brokers from accessing them. Talk about shooting yourself in the foot. Obviously, if you don’t accept deals from half of the origination market, you’re not gonna make money. – Shawn Dehkhodaei
Brokers have lost another lender, with Macquarie Financial announcing it will outsource servicing of its $8 billion mortgage portfolio to Paradigm Quest, although Canadiana Financial will continue to draw on Macquarie funding for its own mortgage originations. “The Canadian mortgage landscape has been one of, if not, the most challenging environments,” Matt Rady, head of Macquarie Banking and Financial Services Group, North America, told MortgageBrokerNews.ca. “What we’ve seen is a narrowing of margins that have made it a challenging business to operate on a medium-term basis. While it’s profitable for us, it’s difficult to see what opportunities there will be. The treatment of broker commissions, coupled with those tighter margins, have put a strain on returns on regulatory capital.” Canadiana will originate mortgages under its brand through the broker channel. Those mortgages will be originated funded, in part by Macquarie. The move will leave in place existing compensation agreements with Canadian brokers at the same time the deal with Paradigm will ensure their clients continue to access the same service levels they now enjoy. The terms of those loans will not be affected by the change. “We’re very pleased to expand our strong relationship with Paradigm to include our full mortgage portfolio,” said Rady. “This partnership enables us to more efficiently run our retail financial services division, while ensuring our mortgage borrowers continue to receive excellent customer service. Grant MacKenzie, who is currently CEO of Macquarie Financial, will join Canadiana Financial to head up the company on July 1, 2011; and as a result of the expanded partnership agreement Pam Mulek, COO of Canadiana, will assume the role of president and COO. capital Direct ad MAY2011_SYD_HR.pdf 1 5/3/2011 3:07:13 PM “Canadiana values your business and we will continue to deliver the same high level of expertise and service you are accustom to” said Mulek, in a statement to brokers. Canadiana is, in fact, pledging to actively win over those brokers with existing relationships with Macquarie. CMP
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With such thin margins on MBS products and new capital requirements on regulated lenders this should be the beginning of the end for many lenders in the broker channel. Also makes you think about the reality of doing trailer fees business. Great concept, but low on lender reliability. Also makes you want to laugh in the face of the next BDO who wants all of your total production. Those who last spread the business around. – Another one bites the dust I think it is time for brokers to wake up and really understand what is going on. Traditionally brokers make more money when the property values increase. This has been very good for them over the last decade with huge increases in house prices meaning they could maintain their income by doing fewer transactions. Also, over the same period, finder’s fees went up almost 75 per cent on average. This was not brokers’ fault but it has lead to the tightening in the spreads. If the competition is the banks and the road reps, it may be important to note that they work for about 30 per cent of the fees the broker receives. The banks are now as efficient technology-wise. The consumer is ratedriven and service is expected. – Change Needed Sent a lot of business to Macquarie as I was top 100 with them, but now this news hits after supporting them heavily based on their growth and supposed dedication to growing in the broker channel. Too bad, most of my deals were on trailer. – Kyle Green
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