CMHC Mortgage Consumer Survey

Around this time each year, CMHC releases its Mortgage Consumer Survey, a keenly insightful report for anyone in the mortgage business.

Its loaded with industry stats, including this year’s headline number: broker market share. CMHC now pegs broker share at 42% of mortgage originations among repeat buyers.

Among the coveted first-time buyer segment, brokers now own the lion’s share (55%) of the market. Last year it was 48%. Lenders who are not in the broker channel, take note of this trend.

But this isn’t all that’s eye catching. Per usual, we’ve combed through this year’s report and yanked out all the other good stuff. If you’re pressed for time, check out the “must-read” data that’s highlighted in red. (The comments in italics are ours.)

Online Information Gathering

• 78% of mortgage consumers turned to various online sources to discover mortgage options and features (unchanged from 2014).
• Out of that 78%:
  • 67% used an Internet search engine
  • 23% said they found their lender website through online advertising
  • 28% said they found their broker website through online advertising
    (This can include search engine pay-per-click ads, online banner ads, rate comparison sites, etc.)
• 70% of mortgage consumers who went online used a mortgage calculator.
  • 51% used a calculator from a lender website
  • 16% used a calculator from a broker website
• Of those using an online mortgage calculator:
  • 62% used one to determine mortgage payments
  • 33% used one to compare mortgages
  • 34% used one to gauge mortgage affordability
• 17% of mortgage consumers reported using a mobile device.
  • 22% of those used a mortgage-related app
    (As reported last week, comScore found that 88% of a typical smartphone user’s time is spent using apps. Apps are clearly used much less for mortgage shopping than for other things.)

Broker Share and use

Broker share continues its upward trend:

• 42% of mortgage originations among repeat buyers are handled by mortgage brokers.
  • Versus 32% in 2012
    (Among other things, industry advertising initiatives, the media and the internet rate ads may be playing key roles here.)
• 55% of mortgage originations among first-time buyers are handled by mortgage brokers.
  • Versus 48% in 2012 and 2014
• 21% of those renewing used the services of a mortgage broker.
  • Versus 23% in 2014
    (This number has still been uptrending over the long term. In 2010 it was 13%.)
• 79% of recent buyers said they were satisfied with their experience using a broker.
• 72% said they would likely use their broker again in the future.
• 73% said they would likely recommend their broker to family or friends.
• 17% of clients reported changing brokers during the mortgage process.
  • 35% of those said they changed in order to get a better rate
    (This was the number one reason for the switching.)

Lender Loyalty and Channel

• 42% of recent homebuyers used a mobile mortgage specialist to arrange their current mortgage.
• 79% of recent homebuyers said they were satisfied with their lender experience (same as with brokers).
• 76% said they would likely use their lender again in the future.
• 69% said they would likely recommend their lender to family or friends.

Lender satisfaction among recent buyers, by channel:

• 84%: were satisfied with their mortgage specialist.
• 77%: were satisfied with their branch rep.

Most mortgage consumers remained loyal to their existing lender:

• 86% of renewers remained loyal to their existing lender.
• 77% of repeat buyers remained loyal to their existing lender.
  • Versus 67% in 2014
• 47% of first-time buyers arranged their mortgage with their primary financial institution.
  • Versus 54% in 2014

Of those who switched lenders:

• 60% used the services of a mortgage broker.
  (Same as last year.)
• 63% cited interest rate as their primary reason.
  • Versus 40% in 2014
    (This is a major change in just 12 months, which makes us a bit skeptical. Consumer education, falling rates and the growing prevalence of rate comparison tools may partly contribute to this surge.)

Product offering from mortgage professionals

• 72% of broker clients reported being offered mortgage life insurance.
• 78% of lender clients reported being offered mortgage life insurance.
  (What this doesn’t tell you is that lender penetration rates are notably greater than brokers’ for creditor life products. Mind you, we’re unaware of good data on this phenomenon. It’s more of an anecdotal observation based on lender and supplier reports.)
• 48% of broker clients reported being offered a line of credit.
• 66% of lender clients reported being offered a line of credit.

Renewal Process

• 71% of renewers reported they were notified in advance by their lender that their renewal date was approaching.
  • 67% of those were notified within three months of their scheduled renewal
• 23% indicated they were contacted in advance by a mortgage broker regarding their upcoming renewal.
• 60% renewed before their scheduled date.
  (Lenders love to lock up clients early—to keep them from shopping around.)
• 61% reported they were “totally satisfied” with their decision to renew in advance of their actual renewal date.
• 55% said their main reason for renewing in advance was to avoid a perceived increase in rates.
• 19% indicated that the main reason for renewing early was because their mortgage professional convinced them that it was the right decision.
• 49% of renewers have their mortgage payment set higher than the minimum required payment.

Advising renewal/refi clients to keep mortgage payments at the same level (to reduce their amortization) can lead to a:

• 66% increase in likelihood of using the same mortgage professional again.
• 55% increase in client satisfaction.

Customer follow-up

• 50% of mortgage consumers who used a broker were contacted by their mortgage professional following their mortgage transaction.
  • Versus 51% in 2014
• 34% who used a lender were contacted.
  • Versus 35% in 2014
• 40% of mortgage consumers “totally agreed” that their post-transaction contact was useful.
  (Are people getting tired of home improvement and gardening tips from their mortgage advisor?)

Types of follow-up contact mortgage consumers would have considered useful:

• Advice on long-term mortgage financial strategies.
  • 25% of lender clients
  • 32% of broker clients
• Housing market information.
  • 13% of lender clients
  • 21% of broker clients
• Information on how to manage financial difficulty.
  • 14% of lender clients
  • 17% of broker clients
• Investment opportunities.
  • 14% of lender clients
  • 17% of broker clients

And perhaps the number-one stat that should leave an impression on any aspiring (or seasoned) broker:

• Post-transaction contact with clients can increase the likelihood for repeat business by nearly 53%.

Survey background: CMHC’s survey was conducted online and polled 3,510 recent mortgage consumers who had undertaken a mortgage transaction in the preceding 12 months. CMHC has conducted this survey since 1999.

Source: CanadianMortgageTrends.com