First National begins its 33rd year in business in 2021 and Scott McKenzie, Senior Vice President, Residential Mortgages, has been here almost since day one. Scott is one of the key architects of our corporate growth strategies and a tireless advocate for the mortgage broker channel. To usher in the New Year, Scott shared his thoughts on the state of the industry and provided insights into First National’s objectives for 2021.
Scott how would you characterize the mood at First National now that the holidays are over?
We’ve returned with a clear mandate to grow and support our broker partners this year. After a hectic 2020, we all needed a break and it was great to step back at the end of December, take a breather and refresh for what I think is going to be a very busy and productive 2021.
Before talking about your plans and priorities, for 2021, can you give us an account of the year past?
From a growth perspective, 2020 was our best year ever. I’ll be honest, I did not think it would be given market conditions last spring. The first two weeks of the pandemic lockdown in March were the busiest on record. But in April, commitments fell 65% and stayed low in May. But the decline was short lived. In June, the market pivoted and suddenly, through the summer and into the fall, originations soared and remained strong into December. It was a surprising turn of events but we’re grateful that conditions came back so quickly.
First National was not alone in growing.
That’s true. I haven’t seen final numbers yet, but I would have to think that the market share of the broker channel increased, reflecting the value brokers bring to Canadians. I think there was also a shift in consumer preference that favoured those who were able to work without interruption using technology.
Were there any lessons learned in adjusting to pandemic conditions?
Definitely. In my career, I’ve never experienced anything like 2020. The financial crisis in 2008-2009 was entirely different. This time, there was no credit crunch and other than a brief period in the spring, housing market activity not only stayed strong, it surged. I would say the first takeaway is that the mortgage industry was resilient even in the face of major challenges. I would also say we got a reminder of just how important and essential brokers and lenders are to Canadians and that technology is not just a time-saver, it is an absolutely necessity.
Are some pandemic-driven changes in behaviour or protocols likely to become permanent beyond COVID-19?
More than likely. I know First National has made good use of Microsoft Teams to stay close to each other and the outside world and while nothing can replace in-person communication, there will be a role for virtual communications long after the pandemic is over. Acceptance of e-signatures and virtual home inspections and appraisals demonstrated that a lot is possible with technology. As to what becomes permanent, we’ll have to wait and see but certainly policy discussions about open banking within the Department of Finance suggest technology will drive substantial change in the future. If and when open banking happens, it will usher in free and safe data sharing across the financial services sector with the promise of greater competition that will be good for consumers. Of course, the technology that will be a mainstay for First National going forward is MERLIN.
First National has gained meaningful advantage from MERLIN, which was designed three decades ago for a virtual world that is now a widespread reality. During the pandemic, it proved once again to be a highly relevant part of our service offering and ability to exchange data quickly. Frankly, we couldn’t do without it.
After a year of record growth, what do you plan to do for an encore?
One of the challenges of a record year is how to replicate it. To us, it starts with doing our best to earn the confidence of brokers and borrowers every day. This is our clear objective. To achieve it, we will focus on the same priorities as always: good service and good products.
What are you doing in the area of service?
We are now fully loaded for growth with the largest workforce in our history, almost 20% higher than a year ago at this time. These resources coupled with MERLIN should allow us to respond in rapid fashion to opportunity. In context, the sudden surge in activity last year did not come without its challenges and at certain points kept us from achieving the high turnaround standards we set for ourselves. Through this significant investment in our workforce, we are all set to perform in 2021.
What’s the plan on the product side?
One of our objectives is to expand Excalibur. Based on volumes since we introduced it, we think there is a significant market need and we have grown our dedicated team to support additional volume. I know Elena Robinson, our National Sales Director is absolutely committed to building on recent momentum in Alt A as well as Prime and is always available to plot strategy with our brokers. Not to get too far ahead of myself, but we’re also working on a couple of very exciting projects that I know brokers will like. We expect to announce those soon.
Care to offer a market forecast?
I get asked this every year at this time and the honest truth is it’s just not possible to offer a meaningful prediction and with the pandemic still a factor and borders closed, it really is anyone’s guess. On the bright side, low interest rates certainly provide fuel for financing activity and it would appear that those rates are likely to stay low for some time. What we can say for sure is First National is committed to growth for brokers and growth for ourselves, all of which is good for those purchasing a home in 2021.
I’m excited by what we can accomplish for borrowers by working together with the broker community. I’d also like to thank our broker partners for sticking with us last year through a very volatile and unpredictable spring. It was a one-of-a-kind year, the most dynamic I’ve seen, and everyone was forced to adjust on the fly. Hopefully 2021 will be a little more even keel but either way, we’re ready to get back to the business of growth and service. We wish everyone great success in the weeks ahead.