Why the role of mortgage brokers is more important than ever

Brokers and agents have an essential part to play in guiding borrowers through the current climate, says CEO

Why the role of mortgage brokers is more important than ever

With every negative comes a positive – and for Frances Hinojosa (pictured), the current turbulent mortgage market is presenting ample opportunity for mortgage agents and brokers to step up to the plate and demonstrate their true value to clients.

The Tribe Financial co-founder and chief executive officer told Canadian Mortgage Professional that while rising interest rates and economic tremors were creating plenty of headwinds for borrowers, the broker and agent community was uniquely placed to help steer them through those challenges and deliver the advice they need.

“There is so much uncertainty out there when it comes to individual cash flow, what they should be doing with the mortgage, what they should be considering. They’re being flooded with so much information from the media and data from economists that they don’t quite know what to do,” Hinojosa said. “There’s a hyper-sense of uncertainty.

“The opportunity there is as brokers, that’s what we’re here to do: to be the guiding light, the shepherd through the storm, to advise clients of what they should be doing with their finances.”

It may have been easy for many agents and brokers to adopt a transaction-driven approach during the COVID-19 pandemic, when purchase activity was booming and rates remained resolutely low.

That frenzy has now cooled, with scores of homeowners seeing their mortgage payments and rates spike over the past 15 months – meaning it’s increasingly important for mortgage professionals to prioritize a relationship- and advice-focused strategy with their clients.

“In this type of environment, brokers do truly have an opportunity to cultivate relationships, to build connections with their clients, and to come from a place of service as opposed to place of sale,” she explained, “really sit[ting] down with them and giving them thorough financial advice when it comes to their cash flow, what they can be doing to either reset, restructure, or re-strategize themselves for the financial future.”

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It's important to keep in mind amidst the recent market slowdown, Hinojosa said, that the record-low-rate environment that prevailed during the pandemic was an “anomaly” – and agents and brokers shouldn’t panic at activity now being much milder.

“What we experienced during COVID in terms of interest rates is not normal – not in a bad way, but not normal in the sense that interest rates should not have ever been sub-two [percent] in the last 30 years,” she said.

“I know that a lot of brokers are hyper-concerned about their business right now,” she added. Indeed, one of the most common questions to emerge from meetings or events, according to Hinojosa, is this: How do I get business today?

“It goes back to the simple rule that, when I started 30 years ago, was the cornerstone of my business: just simply making connections and building relationships,” she said. “And if you can do that, you gain the trust of the consumer, and then your business will flourish moving forward. It’s not a sale – it’s a relationship that you’re building.”

Why taking a ‘deep dive’ is important for agents and brokers

What lies in store for the mortgage market in the remainder of the year remains unclear, with the Bank of Canada hiking rates again after briefly hitting pause and some speculation that persistently high rates could weigh down on homebuying activity.

Still, a cooler climate also gives brokers and agents the opportunity to take a step back and assess their own business model, Hinojosa said, to prime themselves for when things inevitably start to heat up again.

“The only thing that we can be sure of is that there will be uncertainty moving forward, but don’t be fearful of that uncertainty,” she said. “There are opportunities there. You should be taking the time to really do a deep dive into your business and see how you can evolve with the market and change the way that you do your business.

“Life will change, and markets will change. You can’t be afraid of the change. Where you can take control is figuring out what you need to do differently today to succeed, and start to do that and pivot your business.”

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