Canada’s Non-Bank Mortgage Industry More Than Triples Its Business

Canadian real estate sales and development soared, and so have mortgage credit needs. New data from Statistics Canada (Stat Can) shows non-bank credit intermediaries (NBCI) have seen explosive growth. Over the past decade, NBCI dealing with mortgages have more than tripled their assets.

Mortgages: NBCIs, MFCs, and MICs

Today we’re looking at NBCIs, something not well known outside of real estate. More specifically, we’re breaking down two segments – MFCs and MICs. Mortgage Finance Companies (MFCs) originate, package, and sell mortgages to regulated financial institutions. MFCs largely rely on banks to fund their operating capital. They also generate a significant amount of regulated bank mortgages. This makes them both a partner, and competition for banks.

Mortgage investment corporations (MICs) have a longer history as big business. These mortgage lenders sell shares or debt to investors, to finance operations. They typically provide short-term loans, secured by real estate. The role of an MIC is largely to provide more flexible financing, with short-turn around times. For the convenience, these lenders charge higher interest rates than traditional lenders.

Canadian MFCs Hold Over $63 Billion In Financial Assets

The assets held by Canada’s MFCs have exploded in growth over the past few years. MFCs held $63.66 billion in assets at the end of 2018, up 10.09% from the year before. Since 2007, MFC assets are 7,606% higher. The average annual pace over growth since then has been 83.38% a year. This segment went from a relatively small industry, to a big one.

Canadian Mortgage Finance Corporations

The dollar value of assets held by Canada’s mortgage finance corporations (MFCs).

Source: Stat Can, Bank of Canada, Better Dwelling.

Canadian MICs Hold Over $29 Billion In Assets

Canadian MICs have been experiencing rapid growth as well. MICs held $29.85 billion in assets in 2018, up 13.34% from a year before. MIC assets are 211.19% higher than they were in 2007 – which is huge growth. It probably just doesn’t look like much, in contrast to the amount MFCs have grown.

Canadian Mortgage Investment Corporations

The dollar value of assets held by Canada’s mortgage investment corporations.

Source: Stat Can, Bank of Canada, Better Dwelling.

Canadian households have been on a mortgage credit binge over the past decade. A binge so large, they needed to tap non-traditional forms of financing – a lot. Non-bank intermediaries still represent a small segment of the total mortgage industry. However, the growth rate is multiples higher than that of traditional bank lending.

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  • Mitch 3 years ago

    Do assets mean mortgages?

    • Mortgage Guy 3 years ago

      Mortgages and cash would be the biggest assets.

  • CJRay 3 years ago

    Is it not an issue when Harold the Jewelry buyer is now selling mortgages?? I’m very much afraid of our future with this housing market. I don’t see this as a healthy sign. We are wayyyyy past fundamentals of average family incomes being able to afford housing in GTA and Vcr. We’re surpassing NYC in avg prices. Our satellite cities are way higher in price compared to NYC’s. We’re going to be like NYC where two thirds of residents are renters. And sorry TO, but you are no NYC!! Different scale altogether! This is the early 90’s all over again….but much worse in the lead-up.

    • Neo 3 years ago

      You mean late 80’s not early 90’s. The prices already started heading south from 1991 bottoming in 1996.

  • straw walker 3 years ago

    Many of these non-banking mortgage comp. are really just part of the Chinese drug laundering business.
    Chinese people come to Canada under the disguise as immigrants, or university students, then buy several houses, with Chinese drug laundered money using a Chinese lender.
    The Chinese lender charges 20 to 30% rates and eventually forecloses. after laundering mortgage payments. Once the mortgage payment is payed the money is cleaned.
    After the house is foreclosed on the court pays the lender…No names no guilt.. clean money and the next University student buys a house .

    • Mica 3 years ago

      Absolutely incorrect. This the mortgage broker channel. There may be some sketchy mortgage brokers, but the industry is very large.

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