Over the past 30 years, mortgage broker professionals have become a force in the residential housing market in Canada with the help of non-bank lenders such as First National. Now, First National is working hard to bring more brokers into the commercial mortgage market as a means of generating mutually beneficial growth while better serving the needs of commercial clients. Ed Kieser leads First National's Commercial Financing & Broker Services business where he has originated more than $1 billion in commercial financing in partnership with brokers. In this final interview of 2019, Ed looks back on activity levels in the commercial market and looks forward to another successful year in 2020.
How popular was brokering a commercial deal in the mortgage broker channel in 2019?
Very popular and from my experiences over the past 15 years, I would say ever growing as mortgage professionals take on a larger share of the market. Many if not most mortgage brokers saw the opportunity to expand their product base to their clients and supplement their income in a lucrative way.
How did the commercial market perform in 2019?
It was a year of tremendous growth for First National and as the industry leader and largest commercial mortgage provider, I think you can extrapolate how the market itself performed on a more macro level. Demand for financing multi-unit residential asset purchases, new construction and property repositioning continued to be brisk as owners and developers looked to fill an ongoing need in the market for quality rental units. This need has manifested itself in extremely low vacancy rates in many regions of the country. The winds of demographic change are clearly providing a tailwind. By that I mean it’s not only young people entering the rental market, we’re seeing retirees do so as well as they take home equity off the table. Both tenant cohorts also need self storage so demand for financing in that sector is also strong.
What's the outlook for 2020?
It’s early days but the fundamentals look promising. Interest rates remain near generational lows. The Canadian economy continued to grow in 2019 and we’re near full employment. Looking ahead, we expect demographics and population growth to continue to support the apartment and storage sectors while purpose-built industrial is also attracting investment dollars. So although we’re still seeing regional variations with parts of Western Canada continuing to struggle economically, on balance the conditions are right for more growth in commercial property demand.
First National often talks about being "more than a lender." How did that promise manifest itself in the way you do business with both borrowers and mortgage brokers in 2019?
Many institutional lenders treat commercial loans as a commodity and are consequently focused on transactions. We look at the opportunity differently and put the focus on building relationships. This past year, I think we lived our promise very well by striving to set ourselves apart based on industry knowledge, responsiveness, communication, quick approvals, and a simple process that allows us to fund loans when we say we will.
Thinking ahead to 2020, what's your objective?
Grow our book by growing the nature and quality of our partnerships with mortgage brokers. We will devote ourselves to equipping our partners with the tools – the insights and the knowledge – to excel on behalf of commercial borrowers. I find that there is a definite relationship between a borrower’s comfort and trust level and a mortgage broker’s knowledge. The more knowledge we can share with our partners over time, the easier the whole commercial lending process becomes for everyone involved.
Any final thoughts you'd like to share?
We strive to help brokers leverage commercial opportunities to strengthen and grow their businesses and in turn grow ours. This is not a unique goal. But the way we achieve it is. By sharing our insights, freely exchanging our knowledge, and being frank, forthright and timely in our communications, we believe we can build lasting partnerships with mortgage brokers that set them up for long-term success as value-added advisors with a new generation of Canadian borrowers. I'm really looking forward to doing even more business in 2020.
If you have a question or a commercial deal to make with First National, you can reach Ed and his team at:
Ed Kieser, Assistant VP, Commercial Financing
Devin Sembaluk, Senior Analyst, Commercial Mortgages
Lisa Wright, Analyst, Commercial Mortgages