Ontario mortgage brokers at M3 Group will soon have a new edge, the right to sell another Big 6 bank’s mortgage products.

M3 and National Bank of Canada (NBC) announced today that they’re expanding access to NBC’s mortgage offerings, effective October 2021. It’ll begin as a pilot with a select group of Ontario brokers.

The news follows NBC’s successful rollout with M3 in Quebec. “We are very happy with what we have with the partnership so far,” said Nadine Labbe, VP, Retail Lending at National Bank of Canada. Performance thus far has been “aligned with our objectives.”

In a communication to brokers earlier today, the bank said, “The features of these mortgage solutions, including pricing, will be aligned with the solutions offered through other distribution channels.” NBC adds that it “intends to have competitive rates & products” in Ontario’s broker market, and the same as its offerings in Quebec.

Competitive Advantage

M3 Mortgage Group is currently the only brokerage group that distributes a National Bank-branded product offering.

Exclusive lender partnerships, particularly with deposit-taking lenders that have low-cost uninsured products, are one of the biggest competitive advantages a broker network can have. “It’s huge,” said Éric Chamelot, M3’s VP, Lender Relations & Lending Solutions. “It gives [vital] options to our brokers.”

DLC proved that with its HSBC partnership, which is available only to DLC Group brokers in Ontario and B.C. who use the company’s Velocity deal management system. HSBC’s leading rates got DLC’s phones ringing from brokers wanting to switch firms.

M3 likely expects much of the same for its National Bank exclusivity. “It’s a great recruiting tool for us,” said Dino Di Pancrazio, EVP, Strategy & Innovation at M3.

The NBC deal offers key advantages that HSBC didn’t, including a full suite of products and the All-in-One. (HSBC doesn’t offer a fully readvanceable mortgage).

The All-in-One is one of the most flexible HELOCs in the country thanks to its “interest offsetting” feature. That means money you deposit into the AIO chequing account (like your paycheque) offsets debt you owe in the AIO line of credit. White-label products aside, the only other lender with this sort of HELOC is Manulife.

National will also launch its uninsured 1- to 5-year fixed products to Ontario brokers. That could give M3 brokers important options given the limited availability of low-cost 1- to 4-year uninsured products in the broker space. National Bank’s equity-style products will not be available through brokers at launch, however. As for broker compensation, it’ll be “competitive and in line with the bank’s direct competitors (other banks),” says Di Pancrazio.

M3 says its brokers will hear more over the summer as to who can participate in the pilot. “Phase I is targeted at [brokers] in targeted markets,” said Labbe. “And then we will be considering additional opportunities [outside those regions].”

Like DLC, M3 requires that brokers access this exclusive lender via its in-house deal management system (DMS), MortgageBOSS. “All of our brands now have access to BOSS,” says Chamelot. Such exclusive lender access is often essential to moving more brokers off competing systems, like industry leader Filogix and Velocity. Moreover, a critical mass on a DMS creates additional revenue for the house via deal submission fees, which are generally paid by the lender to the DMS provider.

The MortgageBOSS integration “is a different approach completely,” versus the way the bank used to deal with brokers, says Labbe. “The technology makes it possible to revisit the broker channel.” Direct connectivity increases the speed of decisions and document processing and improves the client experience, she says.

“The overall operational cost [has improved] and is what makes it successful and different from what [NBC’s broker model] was in the past,” she says. “Engaging with clients is core to our strategy,” she notes, and there is now a more focused effort to improve cross-sale in the broker channel.

“Cross-sale is a key component,” Chamelot adds. “As is reducing origination costs for the bank.” With margins so tight, maximizing efficiency is make or break.

As for whether NBC will roll out to other lenders someday, Labbe says, “Even though we don’t have an exclusivity agreement with M3, we don’t have any plans to entertain [similar partnerships] with other brokers at this time.”

If it does open up to other firms, it could be a while, given it’s taken over two years to expand NBC’s broker program from Quebec to Ontario. The bank has been purposely methodical in the rollout to ensure it meets its targets.

All in all, this is a good news story for M3 brokers and for consumers alike. The more that big banks distribute through brokers, and the more competitive brokers are with banks, the more competitive the market becomes for consumers.