B-20 is pushing more and more consumers towards alternative mortgage providers
Toronto-based alternative lender Firm Capital Mortgage Investment Corporation saw its profits grow at a steady 3.7% clip over 2018, reaching $25.8 million.
The organization’s income from interest and fees also went up by 2.1% annually, settling at $11.5 million. Year-to-date, this figure was significantly higher with a 16.4% increase to $47.0 million.
These increases further illustrate the growing importance of non-bank mortgage providers, which now comprise a growing share of loans in Ontario.
A Teranet report released earlier this month found that tougher qualification rules have shaved a chunk off the Big Five banks’ market share in Ontario’s mortgage lending sector. These major institutions accounted for 72.6% of the Ontario market’s new mortgages in last year, compared to 75.3% in 2017 and 73.7% in 2016.
Read more: GTA’s borrowers are dumping traditional mortgages
Said growth in the popularity of non-major bank options was quite apparent in Toronto, where private lenders represented an 8.9% share in 2018.
The sector’s steady growth can be attributed to what a February analysis by online comparison portal LowestRates.ca uncovered: The lowest mortgage rates offered by the country’s leading banks are consistently higher-priced than similar products from alternative lenders.
As an example, the study noted that RBC cut its 5-year fixed-rate mortgage to 3.74% back in January, but as of last month, the best available 5-year fixed-rate term from non-bank lenders was at a 3.23% rate.
“The big banks never offer the lowest posted rates on the market, but Canadians aren’t spending enough time researching rates before signing their mortgages, and that’s potentially costing them thousands of dollars a year,” LowestRates.ca CEO and co-founder Justin Thouin said at the time.
