ZOLO Ottawa Real Estate

To outsiders, it may seem like there’s already ample competition for uninsured AAA broker business, but brokers know different.

They know that when you judge the broker landscape based on uninsured rate competitiveness, turnaround times, and specialty products for AAA borrowers, the more balance sheet lenders, the better.

That’s why it was positive to see National Bank of Canada (NBC) expanding its Ontario pilot to all brokers in the province this week. Albeit, only if you’re an M3 Group broker.

It’s been over three years since NBC returned to the broker channel in its exclusive deal with M3, and almost a year since it re-entered the Ontario market.

Brokers may slight the bank for taking so much time to roll out, but NBC had to methodically ensure profitability after its last experience in the channel ended in 2016 from related concerns.

To see if good things come to those who wait, we spoke with Tarek Naguib, NBC’s VP of Personal Banking Financing Solutions for all of Canada. He and his team kindly provided an overview of the bank’s latest broker package.

Among its positives, NBC’s broker channel offers:

  • The bank’s popular All-in-One mortgage
    • Combining a mortgage and HELOC, it lets borrowers use chequing deposits to reduce HELOC interest expense
    • This product is challenged only by Manulife One
    • Although, it’s not available on rentals (unlike the Manulife One)
  • 39/44 debt ratio limits
    • These limits just increased on Monday from 32/40 (requires a 680+ FICO if uninsured)
    • This may be the best improvement it’s made, because it brings NBC up to speed with other banks
  • A solid rental program
    • Clients can own up to 15 units, regardless of the number of properties
    • Although, they allow mortgages on only five rental properties, plus the subject property, which kills the ability to build a 16-door portfolio for most investors. After all, how many investors have a big portfolio of rentals with no mortgages on them?
  • Free appraisal fees
    • Note: NBC orders the appraisal through RPS or NAS; many brokers much prefer to order their own for efficiency’s sake, especially when dealing with five-day financing conditions.
  • $500 to $3,000 cash back to customers
    • This counters similar offerings from its Big 6 competitors and lowers the effective borrowing cost for clients
    • It’s not available on rental deals, however
  • Lots of uninsured rate options, including
    • Solid 5-year rates (e.g., 2.55% variable and 3.99% fixed), a reflection that “we intend to stay competitive,” says Naguib.
    • 1- to 4-year fixed rates that leave more to be desired
    • Unpublished rate promos, which we can’t talk about
    • Thankfully, its published rates in all channels are the same — there’s no favouring retail over brokers, or vice versa, Naguib says.
  • The Made-to-Measure mortgage
    • This product lets borrowers divide their term into several tiers. Each mortgage tier can have its own rate, term, payment frequency and amortization period.
    • “This allows a client to hold both a fixed and a variable, thus hedging their position on rates,” notes Naguib.
  • A “net worth” based lending program with more flexibility for high-net-worth borrowers
  • A “first time right” model that requires documents upfront to speed up approvals
    • “We have a unique lender model with MortgageBOSS. Its direct connection and automated adjudications help speed up decisions,” says Eric Chamelot, EVP, Lender Relations & Lending Solutions at M3.
    • Quoted turnaround times are 48 hours or less
    • Chamelot says the bank is sticking to its SLAs, unlike some of its competitors
  • Up to a six-month rate hold
    • An important edge in a rising-rate market

As with any lender, there are some less-positive aspects as well:

  • Unlike most lenders, NBC allows no buydowns, which often makes them useless for AAA rate-sensitive borrowers who can get approved anywhere
    • This is a “process limitation that’s being reviewed,” Naguib says
  • Volume bonus is based on a team’s performance
    • If you’re a high-efficiency broker, this means that slackers in your office can cost you
  • Brokers must use the MortgageBOSS system to access NBC
    • Few brokers love using two systems given most are used to the industry standard, Filogix Expert.
    • But, “brokers migrating from Expert to BOSS have no learning curve at all,” because BOSS has an Expert simulation mode, says Chamelot.
  • The AIO still has that annoying monthly fee (which doesn’t apply if you get an All-in-One through certain competitors, like Canada Life)
  • There are no switches, albeit with free appraisals and cash back offered on refinances it’s almost the same difference

NBC’s broker channel currently operates only in Ontario and Quebec. As for when it’ll expand east and west, M3’s Christopher De Vito, VP Branding and Corporate Communications, said he expects that with “continued terrific momentum,” (i.e., business performance achieving all planned objectives) the logical next phase in the rollout would be “heading West.” The bank wouldn’t say if that could be this year, next year or later.

That aside, NBC is a powerful lender to have in a broker’s arsenal. Its products provide an edge that competing brokers at DLC Group cannot access. That’s a critical recruiting tool for M3.

Of course, DLC has its own ace up the sleeve with its exclusive HSBC deal. HSBC has much lower public rates, albeit it reportedly has much longer turnaround times as well, based on my anecdotal sample of DLC brokers.

As for M3, having NBC on board helps its brokers close more deals. And from Chamelot’s perspective, “The fact we have a Big 6 bank that’s dealing only with us says a lot about the organization.”

Featured image: Ben Nelms/Bloomberg via Getty Images

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