UPFRONT
ALTERNATIVE LENDING UPDATE NEWS BRIEFS Non-bank lenders hold a fifth of mortgages in Canada
In a recent analysis of Statistics Canada’s mortgage data for the fourth quarter of 2018, real estate blog Better Dwelling revealed that non-bank lenders accounted for one-fifth of institutionally held residential mortgages nationwide at the end of last year. According to StatCan, non-bank mortgage lenders held more than 1.7 million residential mortgages in the fourth quarter, totalling $325.5 billion. Of that amount, nearly two-thirds ($188 billion) is uninsured. The StatCan data also showed that nonbank lenders originated 9% of all new mortgages during the quarter.
Alternative lender boosts lending capacity by $160 million
Neighbourhood Holdings Limited Partnership has announced the closing of a $110 million committed revolving credit facility with ATB Financial and an undisclosed financial institution, as well as an additional uncommitted $50 million accordion. The additional capital provides Neighbourhood, which currently offers alternative mortgages in BC, Alberta, Manitoba, Ontario and Quebec, with financing certainty as it looks to expand its national footprint. “This is a pivotal moment for Neighbourhood and a strong indicator that our efforts to change the way mortgage capital is distributed is resonating with Canadians,” said CEO Taylor Little.
Private lenders and MICs lead in mortgage delinquencies
While overall mortgage delinquency rates are low nationwide, they are considerably higher for certain nontraditional providers, according to CMHC data covering the third quarter of 2018.
Private lenders and MICs together have a delinquency rate of 1.93% – approximately eight times larger than the 0.24% rate observed among banks. However, other alternative lenders are more in line with traditional financial institutions; non-bank lenders posted a delinquency rate of 0.25%, while credit unions had the lowest rate of all at 0.17%.
Bank of Canada interest rate cut possible before 2019 ends
While the Bank of Canada chose to hold its benchmark rate steady at 1.75% in July, some observers are predicting a rate cut before the end of the year. Among them is Capital Economics economist Stephen Brown, who explained, “If we were only looking at domestic factors, we might think that the bank would soon start to consider further rate hikes. Economic growth is on track to outperform the bank’s forecasts in the second quarter, and core inflation has risen in recent months. But outside of Canada, trade tensions have grown, there are signs that US GDP growth is slowing, and the Fed has signalled that it will soon cut rates. We suspect that the next move will be a cut.”
CMI Mortgage Investment Corp. debuts on FrontFundr
CMI Mortgage Investment Corporation has announced improved access to its mortgage investment fund via the FrontFundr online platform. CMI COO Bryan Jaskolka hopes that FrontFundr’s crowdfunding opportunities will help CMI MIC gain greater capital for more client-facing ventures. “We are excited to join the FrontFundr platform and embrace the crowdfunding format so our clients and investors can access our investment product that, in the past, was not available to them due to geographical restrictions and/or investment amounts,” Jaskolka said.
Getting across the finish line A BC-based organization aims to support brokers in putting together alternative deals
Challenging mortgage files are all too common, but fortunately for brokers, there’s a support network that can help them get approvals. Based in Langley, BC, and serving brokers across Canada, The Funding Department launched in 2017 to help brokers secure funds from alternative lenders. According to co-founder Adam Coultish, there are a few reasons The Funding Department can do what some brokers can’t. “Sometimes brokers just don’t know how to package the deal, so we help them with that,” Coultish says. “We also help brokers with deals they don’t want to do. For the sake of time versus money, they say, ‘Hey, here you guys go,’ and they get paid half. We’re here to make brokers’ businesses more efficient, and we also really push mortgage broker education. We constantly teach brokers how we do the deal and happily give away our system and information for free. We think transparency can help brokers be better brokers, and that’s our goal.” The Funding Department teaches brokers which documentation to request upfront and how to put files together. It also drills into another important facet of broker education: managing client expectations. “A lender is more likely to approve a file that’s properly put together,” Coultish says. “The second most important part is how to make sure a client is prepared to not get a 2.99% interest rate, but to understand that they will get a mortgage. If you educate your client well at the
14 www.mortgagebrokernews.ca
14-15_Alternative Update-SUBBED.indd 14
13/08/2019 3:17:21 AM