Private Lending Continues To Grow
Private lenders have doubled their share of Canadian mortgages since 2015.
A Better Dwelling report revealed that private lenders originated over $2 billion last year and currently have about 7.87% of the national mortgage market. In fact, the private channel has enjoyed six straight quarters of market share growth.
Private mortgage broker Amit Sandhu of Sandhu Capital believes that the stress test and rising interest rates will reroute more borrowers towards the private channel, but noted that uncertainty has gripped the market this year.
Interest rates rising will make private lending more popular among borrowers. However, 2018 is a year where everything is slow. Banks won’t originate as much and private lenders won’t originate over $2 billion like they did last year. Everybody is nervous this year, including lenders and borrowers, and everybody is playing with that fear. So far 2019 has been a decent year. Housing prices have flattened out, and sales have slowly picked up in the last quarter. With the election coming up, there may be major fluctuations in prices as different parties are for and against the mortgage stress test.
Stringent qualification from chartered banks may leave borrowers with few choices other than private lenders or alternative financing.
“The population is growing. More folks are coming in and lenders are not willing to lend, so where are these folks going to go?”
Amit Sandhu, a Mortgage Architects broker, doubt’s private origination growth will slow down, because there’s nary a sign that lender regulations will ease any time soon. Even with regulations easing, the market for private mortgages is attractive due to higher prices and lower income levels, and speed of processing.
“I focus on private mortgages because I understand them very well and I have a network that provides me competitive rates for my clients. I can advise my clients how to approach getting a loan from a MIC or private lender, what kind of rates and fees to expect and if it’s an attractive option for them, given their current financial state.”
