Canada’s Big Banks Bring Mortgage Lending to a Standstill
Despite a strong economy and relatively low mortgage rates, the idea of home ownership is slipping away. That’s because strict lending rules and a lack of innovation from Canada’s big banks is bringing the dream of home ownership to a standstill. Because of strict lending rules, it is estimated that 40,000 potential home purchases were sidelined by these policies in 2018 alone. Moreover, Canada’s banks, which are making billions of dollars every quarter, don’t see any reason to offer new or expanded mortgage options for potential homebuyers.
But there already are options out there for well-qualified borrowers who have been rejected by traditional lenders. When it comes to innovation, convenience, and flexibility, more and more Canadians have discovered the benefits of using a Mortgage Investment Corporation (MIC) like Mortgage Company of Canada. In fact, this innovation has helped potential homebuyers become homeowners and has been a boon for income-starved investors.
Because it is a private lender, Mortgage Company of Canada is not obligated to follow the unnecessarily prohibitive, federally regulated mortgage rules.
It’s not just well-qualified borrowers being rejected by traditional lenders that are seeking private lenders like Mortgage Company of Canada. Tougher lending rules have made it very difficult for self-employed Canadians to prove their income.
The banks want verifiable proof of true earnings while the stress test, which requires almost 20% more of provable income to qualify for the same mortgage that was available in 2017, makes it even tougher to secure a mortgage.
This helps explain why MICs have risen in popularity over the last number of years.
Mortgage Company of Canada: Helping You Invest in High-Yield, Private Mortgages
Between the big banks lack of innovative mortgage options and stricter lending rules, the idea of home ownership in Canada is slipping away. Those turned down by the banks though are discovering how convenient and efficient it is to use Mortgage Company of Canada. Accredited investors have also discovered the benefits of investing in mortgages secured by residential real estate.
A growing number of well-qualified borrowers who have been rejected by traditional lenders are now coming to Mortgage Company of Canada to secure a mortgage. This has allowed Mortgage Company of Canada to build up a diversified pool of mortgages secured by residential real estate in the GTA and Golden Horseshoe.
In addition to helping homebuyers get onto the property ladder, Mortgage Company of Canada’s careful lending process has provided qualified investors with above-average yields. In April 2019, Mortgage Company of Canada investors realized a tailing 12-month yield of 9.68% with
distributions paid monthly. Our annual target yield is 9.25%.1
To put that into perspective, if you had of invested $100,000 with Mortgage Company of Canada in 2009, in April 2019, that equity would be worth $271,447.
Our total mortgage portfolio is valued at $255 million and that number continues to grow. Since the start of 2019, out mortgage portfolio has increased almost 10%; in April alone, we funded an additional $20 million in mortgages.
Over the last 12 months, our mortgage portfolio has increased by 63%. Of the 781 residential mortgages in our portfolio, 81% are located in the GTA, 11% are in the Golden Horseshoe, 5% are in major urban centers, and 3% are in Ottawa. The majority of our portfolio (76%) is made up of first mortgages; the remainder, (24%) is made up of second and third mortgages.
Overall, 58% of our mortgages secured by residential real estate matures in six months; 100% matures in less than one year.
Mortgage Company of Canada has been so successful because our management team, with a combined 45+ years of experience in real estate, public market, and risk market, is one of the most knowledgeable in the MIC industry.
On top of that, Mortgage Company of Canada is unique in the MIC industry in that it is overseen by an independent board. It also follows a stringent underwriting analysis and leverages its third-party mortgage brokerage relationships, as well as affiliated mortgage brokerage for quality mortgage originations.
Further, management and the Board of Directors have invested approximately $11.0 million in Mortgage Company of Canada, on the same terms as our investors, ensuring our investments are aligned.
To find out more, please contact Mortgage Company of Canada by visiting our web site or calling 1-866-318-7222.
- “April Newsletter,” Mortgage Company of Canada web site, last accessed May 15, 2019; https://www.mcoci.com/wp-content/uploads/2019/05/Mortgage-Company-of-Canada%E2%80%93APRIL-2019-Newsletter.pdf.