Market Trends of Canada Mortgage/loan Brokers Industry
Booming Alternative or Private Lending Market
The Bank of Canada (the Bank) in its current Financial System Review (2021) reported growing household debts and greater shares of new mortgages with higher loan-to-income and loan-to-value ratios. According to Statistics Canada, non-bank lenders increased their non-insured residential mortgage lending by 49% during the fourth quarters of 2019 and 2020. These are signs that the market for alternative or private lending is still expanding. In these situations, mortgage brokerages are crucial. They help clients find acceptable mortgage alternatives with their interests in mind. Brokerages must now thoroughly explain the financing alternatives, risks, and implications of taking on extra debt to their clients, especially the more vulnerable ones given the current state of uncertainty surrounding mortgage interest rates.
Increased Interest in Investments with Greater Yields
Investors who want a higher return are turning more and more to mortgages as an alternative investment. The Bank noticed that the total amount of financial assets held by mortgage investment firms (MICs) has grown quickly since 2008. It is expected to grow by an average of 10% from 2018 to 2021. Because different real estate investments have different outlooks and construction financing can be hard, more investors may be putting their money into mortgage investments that are riskier. It hasn't been given the attention it deserves, but it's important for investors to know what's going on during a mortgage investment and when the mortgage is extended.
