What are the main challenges facing specialized lenders?

How does the specialized lending landscape look in 2022? In this Power Panel, Leanne Conroy, BDM in GTA/ON North at MCAN Mortgage, and Grant Armstrong, director of national sales and lending at Community Trust, delve into the main challenges mortgage lenders have faced over the last year, the trends they are expecting to emerge and what their companies are keeping top of mind in the current climate.

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Paul: [00:00:15] Hello everyone and welcome to the latest edition of CMP TV, a specialized lending power panel brought to you by Community Trust and MCAN Mortgage. It's hard to believe that we're nowhere near even the halfway point of 2022, but what a year it has already been around the housing market. As if last year's revisions to the stress test and the lingering effects of the pandemic were not enough. But this year we've already seen a Bank of Canada rate hike with more to follow and a federal budget that put housing front and center, including a crackdown on foreign ownership. So amid all of this volatility, where does the specialist lending landscape lie and how are the companies riding these waves? Thankfully, we have speakers from two of the leading firms in the Canadian market who can help explain how they are staying on top of it all and help your business too. They are Leanne Conroy, a BDM in GTA and Ontario North for MCAN Mortgage and Grant Armstrong, Director of National Sales and Lending at Community Trust. So welcome, both. Let's get straight into it. What have been some of the main challenges faced by mortgage lenders over the past year? And how is your company face those hurdles? Leanne, I'm going to come to you first.

Leanne: [00:01:36] Well, one of the main challenges due to the increased volumes in our real estate industry with unprecedented volumes with purchases and refinances, is really keeping the work life balance and the health and the well-being of our employees top of mind. So one of the things that we've done is we've instilled a hybrid work, remote ability for our employees. So that really allows them to define their own workplace. And because of this, we have been actually accredited two years in a row as a great places to work. And one of the other things as well as we've we've instituted a four day work, four day holiday weekend for our employees. And actually, this is our second year that we've been doing it. I think also. Another hurdle is keeping ahead of the innovation. Obviously, digital innovation had to be accelerated over the last couple of years. And we've just luckily just launched our portal for our brokers, which allows them to be a little more efficient and allows us to be a little bit more efficient. We have increased competition, which is another hurdle in our workplace, in our industry. There's many new brands. They're very aggressive and it keeps us all on our toes, actually, which is great for for the borrower. The the biggest hurdle as well would be uncertainty. We don't. There have been some major things, as we all know, that have been thrown at us over the past couple of years. And we don't have a crystal ball. We don't know what's coming. So I think it's very important for our companies and MCAN home to choose a lender that's very strong and stable and can be agile to provide flexible solutions in this uncertain environment.

Paul: [00:03:29] Thank you, Leanne. And that uncertain environment, Grant, I have a feeling it might sort of roll throughout our conversation today. What are your thoughts on this uncertainty in the market?

Grant: [00:03:39] Absolutely. Uncertainty is something that we watch or try to watch very closely. Last two years have really, really made us guess on what's happening. Nobody's 100% sure what's going to be happening the next 30, 60, 90 days down. You used to be able to go back five years and you could map out a market. You knew the seasonality, you knew the dates when volumes would be high, applications brokers were on vacation. You could measure that today. You can't. So what we're doing today is we're seeing really close to the marketplace. We're working with our broker partners. We've instituted broker advisory councils across the country that we work with and we get feedback. What are they seeing? We ask right to the front line. What are you seeing in your market? What are you seeing that's happening this week? Last month. And we're bringing that in and making sure that all the internal stakeholders understand what's happening in the marketplace and adapting where we need to adapt. We've tried to forecast and forecasting works, but we're being being very nimble, very, very agile to be able to adjust and support the business when and how we need to.

Paul: [00:04:42] Well, you mentioned forecasting, though, Grant, and now I'm going to to ask you if you can to to look into that that crystal ball that Leanne said. It's impossible to have. I know. But are there any significant trends that you're expecting to emerge in lending, perhaps over the coming months, perhaps over the coming years? Grant, I'll stick with you.

Grant: [00:05:02] Yeah, absolutely. So while the crystal ball is a little a little foggy, doing our best to work through it. But one of the things that we see is going to be a key part of the lending landscape going forward is innovation and technology. The more involvement in technology, the more adoption or adoption to technology. Community Trust launched its own portal last year, and we we grew that to even have a mobile app that supports our partners so brokers can be on the road in the marketplace where they need to be. We continue to double down on technology. We continue to get feedback from our partners of what they need to help the process simpler, easier, faster, better. That's the number one thing that we continue to see, or at least I continue to see going forward.

Paul: [00:05:47] Yeah. No surprise to hear Tech come up already. Leanne, when you look at the trends, what do you see?

Leanne: [00:05:53] One of the major trends that we've seen going forward and in the past few years is multi generational borrowers. And actually, Statistics Canada has told us that the number of multi generational borrowers in one single household has grown a staggering 37% since 2001. So we are trying to offer products and guidelines that can that can help with this, with affordability obviously being stretched, we allow for borrowers who are family borrowers to have family members or even people who are not family members contribute to the income, but they're not our clients and they're not on title.

Paul: [00:06:40] Yeah, it's interesting as well. I mean, you're talking about people sort of gravitating a little bit towards the lending space, which obviously is something that we saw throughout the pandemic, of course. Are you expecting that shift to continue there?

Leanne: [00:06:53] Yes, I think that for a couple of reasons. Unfortunately, what we've seen over the last couple of years is a decrease in income and unfortunately, loss of jobs. And that that that creates a reliance on credit. And when when we rely on our credit a little bit, our credit may become bruised. So we are looking for policies that can help keep these keep these borrowers buying homes, living in their homes, and offering them solutions that. Allow them to eventually gravitate back to the A space. But the other thing too is that approximately 13% of Canadians are self employed borrowers. So it's critical for us to evolve products that can accommodate these types of borrowers.

Paul: [00:07:38] Yeah, I think that's such a great point around self-employed borrowers. I mean, the numbers have really gone up Grant and that's got to be something you're paying attention to as well.

Grant: [00:07:46] Absolutely. Is self employed, non traditional income verification type clients, commissioned clients just with unique financial situations is something community trust really prides itself on being able to support. The last couple of years have shown Canadians very resilient, very ability to work and try different things. More people became self employed, changed the way they worked, the different types of income structures have come out. So we've been adapting our programs to support those types of Canadians and we don't see that letting up. We continue to see going forward that Canadians are going to need and look for alternative financing to be a cornerstone of the financial solutions that they're looking for, whether it be for their own principal home or investment properties that they may be able to do.

Paul: [00:08:33] And you're talking, though, Grant, as well about adapting programs. And that sort of makes me think about what else your company is doing to sort of keep on top of the current climate. Can you give us some insights?

Grant: [00:08:46] Again, keeping on top of the current climate is incredibly important. So community trust is in expanding. So last year we and this year we went into British Columbia from Ontario. We're starting to look at other provinces. We've started a pilot with some partners in Alberta, and we're going to continue to roll out across the country in the coming years. But what that does  make sure that we look at the market not at a macro level, but really micro. What's happening in Prince George, what's happening in Windsor, what's happening in Ottawa and Vancouver and all these great communities? So what we've done is we've really gotten down to the ground again, talk to our broker partners. They know what's happening. They've brought us a lot of information. We've reached out to our appraiser partners, our industry partners to gather more and more information and learn about the climate so that we make sure that when we're working with partners in a specific area, we've got the right products, right solution and right information to support them.

Paul: [00:09:39] Some big things clearly going on at Community Trust. But Leanne as well, I know that some big changes going on at MCAN as well.

Leanne: [00:09:46] Yes. Well, the biggest change, of course, is our rebrand. And this is really, really important because we, especially with so many different brands out there and the clients are not familiar, we have a story to tell. We are MCAN. We have been in business, as I said before, for very many years. We're a very strong and stable company. And it's really important that that that all of our stakeholders know that we prioritize our performance. And so we prioritize this performance for not only for our shareholders and our employees, but for our brokers and our clients. And I think that this assurance will continue to allow us to grow here and into the future.

Paul: [00:10:30] And if you don't mind, both of you, I'm just going to throw one final question your way. Quite a simple one in some respects, but also I'm hoping for a strong answer here. What is the number one thing that you would like mortgage brokers to keep in mind in their approach to lenders? So maybe you're going to give us a tip. Maybe you going to give us a take away. I'm wide open on this one. Leanne, I'm going to throw it at you first.

Leanne: [00:10:56] I think it's to remind our brokers that we are partners, that we're in this together for one common good, and that is to help our clients move forward. So I guess the tip would be just to have patience, to have patience with with with all of your lenders. And because we are partners and to know your clients and I know that they hear that quite a bit, but the more questions you can ask, the, the, the, the better that we can work together to find the right solution for our clients.

Paul: [00:11:29] Patience is the key. Grant, what's your tip?

Grant: [00:11:32] Well, I think Leanne said it very well. Just to add to that, though, just remember that when you know your client, you have to help us get that information and the application. The deal notes many brokers will spend hours days working with a client to get to know them, to understand them, to build that package together. We don't get hours and days. We get the application coming across. So the best way you can communicate is put that best application for it. Tell us what the client does. How do they earn their income? That's a huge one. If they're self employed and make sure you tell us everything we need to know so that we can get to know your client as well as you got to know them.

Paul: [00:12:11] A great message to to wrap things up with my huge thanks to Leanne and to Grant and to both MCAN Mortgage and Community Trust. Clearly, the market is going to remain an interesting one throughout the year, so please keep your eyes peeled and right here at CMP TV.