Shifting marketplace demands flexible mortgage solutions
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IT'S A fast-moving mortgage market currently. To keep on top of the moving mortgage parts for both lenders and their broker partners, adaptability is the key.
It is not enough in the current market to offer traditional lending options. Lenders need to be able to step in and offer opportunities that represent uniquely flexible financing solutions for broker clients.
Those lenders that can offer traditional mortgage financing, as well as alternative solutions, will stand out and attract broker interest.
MERIX is a monoline lender committed to providing mortgage brokers with choice and innovative solutions to help you with your business. As a broker signed up with MERIX Financial, you get access to three options:
MERIX, where you can choose trailer fees and benefit from having a continual income stream
Lendwise, where you can choose to maximize your upfront compensation
NPX is your alternative lender for clients who need more consideration than just their credit. To learn more or to sign up with MERIX, visit: http://info.merixfinancial.com/welcome-to-merix-financial
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“We think we’re positioned in the marketplace to offer our broker customers a wide range of solutions for their borrowers in that we have traditional, prime business mortgage [solutions] as well as near-prime”
Boris Bozic,
MERIX Financial
To further sidestep the competition, offering choices for brokers in how they are compensated after closing mortgage files can also help to propel lenders to the top of the pyramid.
For MERIX Financial, keeping the needs of its broker clients top of the lending agenda dictates every one of its financing initiatives.
“We think we’re positioned in the marketplace to offer our broker customers a wide range of solutions for their borrowers in that we have traditional, prime business mortgage [solutions] as well as near-prime,” Boris Bozic, president, MERIX Financial, says.
“[Near-prime] business is becoming even more important with the evolving and changing marketplace.”
Keeping its business pillars front and centre, MERIX strives to balance the needs of the changing market with the demands of its broker clients.
“At a 10,000-foot level, we would like the market to view us as being customer-centric. To achieve this, we will continuously focus on providing a wider range of financing solutions, and equally important, making it simpler for our broker customers to do business with MERIX,” Bozic says.
“We are committed to being a one-stop solution for all our broker customers so there isn’t the need to jump around from one lender to another based on product type because we provide the financing required for the vast majority of broker customer needs.”
Market forces: demand up and supply down
Understanding and embracing lending trends, as well as market conditions, helps MERIX meet its lending endgame.
“We have responded to the market conditions in the direction the market is going and are able to capture the opportunities that are available,” Bozic says.
“I have been hearing about a bust in the real estate market for 22 years, yet real estate was extraordinarily resilient post-2008. Then, of course, we had a pandemic that was another boom for our real estate market,” he adds.
MERIX, keenly aware of the economic principles at play, has harmonized its product offerings to reflect lending realities.
“In this country, in almost every region, it is a seller’s market. There is a shortage of supply in simple supply-side economics,” Bozic points out.
“In the near term, I don’t see mortgage balances and the price of homes decreasing at all just because of the lack of inventory.”
Broker compensation and trailer fees
Recognizing that mortgage financing adaptability is a core ingredient in the perfect lending mix, MERIX makes sure to remain flexible with its broker partners by offering a choice of compensation options.
Bozic explains how MERIX is one of the only lenders to give its brokers the option of customizing how they want to get paid on a given mortgage transaction
“We give our broker customers the opportunity to choose what meets their needs best,” he says. “They can pick and choose which compensation model they want to get paid for on a particular file.
“Within our world, you can choose either MERIX or Lendwise and you can do it on a per-transaction basis, which is once again what is meeting their business needs,” Bozic elaborates.
“It really is unique in the marketplace that you are approved to do business with us, but you are not pigeonholed into one compensation model.”
One compensation model that is “really in our DNA and sets us apart,” Bozic describes, is MERIX’s commitment for the past 17 years to paying trailer fees consistently for its broker customers who choose this compensation option.
While having the opportunity to share a designated portion of trailer fees is the operational model in other countries, such as Australia, Bozic is quick to point out that the vast majority of lenders in the Canadian mortgage space do not offer such attractive wealth-generating options to their broker customers.
“What MERIX has really done is to decide to share this revenue with our broker partners. These monies are earned by all lenders over that period and MERIX simply said that we will make sure that our broker customers are sharing in what we earn, as well as over the life of that mortgage,” Bozic emphasizes.
For those brokers who prefer traditional upfront compensation, MERIX offers Lendwise as a second compensation model option.
“[Lendwise] is for those brokers who want to get paid today and will worry about tomorrow, tomorrow,” he says.
Lending directions
While compensation options and harmonization of lending policies is well underway for MERIX, it is also turning its focus to alternative lending options for its broker base with its NPX product.
NPX has been well-positioned to offer alternative options such as contract-rate mortgage qualification, extended ratios, rental offsets, mortgages under holding companies and interest-only options for the Ontario mortgage market.
In a concerted effort to expand product offerings beyond the Ontario market, NPX now has a lending presence in British Columbia to offer choices for borrowers who may not fit the traditional lending parameters, such as self-employed, contract workers, bruised credit borrowers, or those with unique income situations.
Now offering a 40-year amortization mortgage option as of 2021, NPX will continue to offer a host of alternative lending solutions while working to simplify and streamline its lending policies to adapt to all the moving pieces on the lending playing board.
“We want the experience that you have in the morning to be the same experience and requirement that you have in the afternoon. By simplifying things, it will be a huge benefit for our broker customers and equally for our employees,” Bozic emphasizes.
“I am very bullish as to the results that this will garner for MERIX Financial,” he concludes.
Strong housing outlook despite cooling ahead
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“At a 10,000-foot level, we would like the market to view us as being customer-centric. To achieve this, we will continuously focus on providing a wider range of financing solutions, and equally important, making it simpler for our broker customers to do business with MERIX”
Boris Bozic, MERIX Financial
“I have been hearing about a bust in the real estate market for 22 years, yet real estate was extraordinarily resilient post-2008. Then, of course, we had a pandemic that was another boom for our real estate market”
Boris Bozic,
MERIX Financial
Source: CREA Bank of Canada findings
Increase in overnight lending rate on March 2
0.25%
Increase in Consumer Price Index in January 2022
5.1%
Increase in growth of Canadian economic indicators in the fourth quarter of 2021
6.7%
Key economic indicators affect lending trends
Date of first of several anticipated rate hikes in 2022
March 2
579,600
Expected housing transactions for 2022
Total housing transactions in 2021
667,000
Year-over-year decrease
13.1%
Source: RBC Housing Report
“We understood that there are many brokers who prefer that [traditional] model and maybe are not comfortable with trailer fees. We did not want to exclude them and exclude ourselves from that opportunity.”
With both broker compensation models in high broker demand, MERIX is in the process of streamlining and simplifying the process from a four-tier to a two-tier approach.
“We have simplified, and we now have two tiers within the Lendwise compensation model,” Bozic explains. “We wanted to make it simple to understand for our broker customers and for our employees.”