Executive on the trends likely to impact the alternative space next year – and what brokers need to keep in mind
A surge in the number of self-employed individuals and gig-economy workers in Canada’s labour force – and housing market – has seen the alternative lending space take big strides in the mortgage industry over the past several years.
Often unable to secure a mortgage with a conventional lender, those borrowers have been turning to alternative solutions in rising numbers as a result, with the space expecting to see its strong performance continue in 2025.
The emergence of new borrower types whose mortgage applications don’t fit the criteria of mainstream lenders will fuel the continued rise of non-traditional income verification next year and beyond, according to Armando Diseri (pictured, top left), chief sales officer at Alta West Capital.
He told Canadian Mortgage Professional that he saw a dramatic reshaping of the lending landscape at play, not least because of those evolving borrower demographics and advancements in technology. “A growing number of self-employed workers, gig-economy participants, and newcomers are turning to alternative lenders,” he said, “for flexible solutions like stated-income and newcomer-focused mortgages.”
He noted brokers were “increasingly prioritizing speed and efficiency” in the mortgage process, something that he said was also opening their eyes to alternative options when traditional lenders proved unable to turn around a deal quickly.
Also in store for the year ahead in alternative lending: a continued focus for borrowers on debt consolidation, especially with rates still high despite ticking downwards in recent months. Equity-takeout solutions to manage financial stress will remain popular, Diseri said, while AI underwriting is set to enhance risk assessment and drive the borrower experience forward.
Shubha Dasgupta, CEO of Pineapple Financial, highlights optimism for 2025's mortgage market with rate cuts, 30-year amortizations, and strong consumer sentiment. https://t.co/gxNT924xF4#MortgageMarket #HousingAffordability
— Canadian Mortgage Professional Magazine (@CMPmagazine) December 2, 2024
Which new borrower types are at play in the alternative lending space?
As attention towards the alternative lending segment has grown, the type of borrower transacting in the space has also diversified, according to Diseri. Unsurprisingly, affordability challenges have played their part in some of those trends.
“Rising housing costs have spurred interest in co-ownership models, with borrowers purchasing properties jointly – often as family members or friends,” he said. “Additionally, immigration has brought a surge in demand from newcomer borrowers, often with limited local credit histories.”
For brokers, maintaining a client-centred approach – and remaining laser-focused on being adaptable – should be key areas for attention in 2025, Diseri said. “By tailoring solutions to meet the evolving needs of gig workers, multigenerational homeowners, and newcomer borrowers, brokers can expand their reach into new demographics and retain a competitive edge.”
The ever-changing technology landscape and variety of tech offerings for brokers should also be top of mind, especially with borrowers increasingly expecting a seamless digital experience and informed guidance at every turn in their mortgage journey.
As ever, an emphasis on education will also reap rewards. “Transparency and proactive education about mortgage products and strategies will build trust, particularly as regulatory scrutiny intensifies,” Diseri said.
Steady and consistent growth, meanwhile, is forecast for the alternative market. “The MIC [mortgage investment corporation] and private space will continue to grow, no different than the ‘B’ space did over the past 20 years,” he said. “It’s more important than ever that brokers seek to educate themselves to learn what lenders like AWC can do for you and your clients.
“By focusing on these strategies, brokers can navigate challenges while strengthening relationships and positioning themselves as trusted advisors in 2025’s competitive landscape.”
Alta West, TriWest ink partnership
Gearing up for 2025, Alta West announced last month that it had partnered with TriWest Capital Partners, which completed a majority equity investment in the western-based lender.
George Botros (pictured, top right), Alta West’s chief executive officer, told CMP the deal arrived after a decade-long professional relationship between the two companies, with several TriWest executives having initially been AWC investors.
Chard Danard, for instance – senior managing director at TriWest – served as an AWC board member for years. “His advice and keen insight has long been valued by our team,” Botros said, “and this strategic partnership marks the natural next step in AWC’s evolution as it will tactically and rapidly grow our assets under management [AUM], allowing for an enhanced and broadened product suite, which we believe will strengthen our bond with broker partners.”
The arrangement will see no change at the fund level on the investor side, Bostros emphasized, with shareholders, directors, fund mandate and regulation to remain the same. But TriWest has injected a committed 48% management investment, “enhancing our capital liquidity and allowing us to uphold the mandates of our funds – steadfast, secure and stable.”
That investment, he said, “will be used to further diversify our portfolio, reducing the concentration of our assets and offering greater value to investors, brokers and stakeholders alike.”
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