Canada’s leading fintech disruptors are transforming the mortgage landscape and consumers are the main beneficiaries.

That was the message delivered by the leaders of three companies — Pine, Neo Financial and Nesto — who took part in a panel discussion called “Hiking Ownership, Lowering Rates, Disrupting Mortgages” at the recent Elevate Festival tech and innovation event in Toronto.

However you look at it, the industry is evolving and all three companies say there’s a need for change.

Offer clients added value while preserving long-standing mortgage industry relationships

For real estate agents, informing clients of new options that could potentially save them money could be an opportunity to offer added value. And who doesn’t want a happy client, especially if they send more business through future referrals?

On the other hand, what to do about those long-standing relationships agents may have built with existing mortgage brokers is something to consider. One idea: target independent mortgage lenders who work with different products in a way that informs them of this newer type of competition.

The biggest problem with legacy financial institutions

The companies are promoting their time-saving digital application process while promising unbeatable lending rates and an enhanced customer experience.

“Traditional banking doesn’t meet people’s expectations,” asserts Justin Herlick, CEO and co-founder of Pine, after being asked about the biggest problem with legacy financial institutions.

“Look at the banks’ websites. They won’t show you their best rate, and then you have to negotiate,” complains Malik Yacoubi, CEO of Nesto. “‘Low from the get-go’ is our tagline.”

Meanwhile, Neo Financial also boasts of its low rates compared to traditional lending institutions. Its website posts rates for residential mortgages as of October 25, 2024, as low as 4.49 per cent for a five-year fixed term (closed), compared to 5.05 per cent offered by the big banks.

Savings passed on to consumers; advisors rewarded based on customer satisfaction

In explaining how they’re able to offer lower rates, the companies will tell you they eliminate extra fees and intermediaries and have lower overhead and, as a result, can pass those savings on to consumers.

Both Nesto and Pine say another reason they can offer competitive rates is because their salaried advisors don’t receive a commission. In Nesto’s case, advisors are rewarded based on their customer’s satisfaction.

Incentives

Add to that all kinds of additional enticements to get business. For example, Neo’s site says it’s “Giving away mortgage payments for a year, mortgage payments for six months and that lucky winners can get up to $25,000 towards their mortgage.”

Nesto offers a low-rate guarantee with a $500 cash payout if you find a lower rate elsewhere. They also have a 150-day rate hold option on most mortgage solutions, and Pine says all qualified Wealthsimple clients get a personalized cash rebate to help with their monthly mortgage payments.

Digital applications

These disruptors are using a digital mortgage application process they say is simple, easy to understand and set up to save consumers the hassle of in-person appointments with the big banks.

Pine, for one, says its pre-approvals are usually within 24 hours.

Personal service hasn’t disappeared though. Consumers are informed that mortgage agents will get in touch after receiving their application and they can also contact a member of the team throughout the process.

May be worth investigating on behalf of clients, whose feedback can inform what you share

You may want to check out some of these companies for yourself first to gauge whether they live up to the hype or if any of the offerings might hold particular appeal to your clients. Many homebuyers, especially first-time buyers, face a steep learning curve about the various aspects involved in their big purchase and agents obviously want to make their experience as seamless as possible. 

If you do share these new mortgage options with your clients, it’s worth asking for their feedback (good and bad) on the experience, which you can then use to inform other buyers you’re working with. You’ll also get a sense of which demographic is more inclined to give fintech disruptors a try. You may be surprised to learn they’re not always the younger buyers.

They’re growing

An increasing number of Canadians appear to be turning to these alternative lenders, which continue to grow and expand.

Neo Financial’s chief banking officer, Tim Morris, says his full-service company is one of the fastest growing, with one million clients and a 4.8 rating on Google reviews.

Meanwhile, Herlick says Pine has partnered with Wealthsimple, which brings in a bigger audience.

And Nesto, which bills itself as Canada’s first digital mortgage finance company and the country’s leading digital mortgage platform, is now in its fifth year and has evolved from a broker to a full-end-to-end mortgage platform, “originating billions in annual mortgage volume.”

With these types of disruptions to the mortgage market happening across the country, your clients have several options they may never have dreamed possible. Where these new fintech operators in the field go from here could well be determined by the extent to which they live up to consumer expectations.