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Our 2020 Annual Residential Mortgage Industry Report discusses the early impact of the pandemic on the mortgage industry. It provides pre-and during COVID housing finance information to help you make more informed decisions.
Fastest growing mortgage segment in 2019
Mortgage investment corporations provide a channel for small investors to participate more directly in the housing finance market via private lending.
In 2019, these lenders held between $14 billion and $15 billion in mortgage debt. This represents 1% in mortgages nationwide, a similar share as in 2018. Mortgage investment corporations continued to be the fastest-growing segment in the mortgage industry, with an increase of approximately 7.6% compared to 2018. Overall, residential mortgage debt grew by 4% during this period.
Since these lenders are usually more concentrated in large urban centres, their growth was more predominant in:
- Toronto
- Vancouver
- Calgary
Mortgage Investment Corporations show slightly riskier profile
A number of changing trends in the mortgage market suggest the overall portfolio of loans for these lenders increased in risk:
- First mortgages declined from 79.5% to 78% between the last quarters of 2018 and 2019.
- The average loan-to-value (LTV) ratio increased from 58 % to 60%.
- Delinquencies of 30 days or more and foreclosures rose.
Data from a survey of MICs conducted by Fundamental Research Corporation showed that the risk profile of the MIC sector slightly increased in 2019.
Despite the riskier profile, the use of debt by mortgage investment corporations decreased during this period.
Early impact of COVID-19 on this lender segment
The Fundamental Research Corporation’s survey also gathered insights into the impact of the pandemic on mortgage investment corporations.
- Mortgage investment corporations also offered mortgage deferrals and other types of accommodations to financially strained mortgage consumers. An estimated 10% of mortgage consumers asked for a mortgage deferral.
- As regulated financial institutions tightened their lending guidelines and credit availability, a greater number of mortgage consumers turned to these lenders.
- Mortgage investment corporations received a significant number of redemption requests from investors during the months of high financial uncertainty.
- If the impact of the pandemic continues, the likelihood of reducing or suspending dividends at the end of 2020 could increase.
About the Residential Mortgage Industry Report
The Residential Mortgage Industry report is an annual, economic analysis of the residential mortgage industry in Canada. The report:
- provides a whole market view from origination to funding, covering insured and uninsured mortgages from all lender types
- consolidates information from a variety of sources to provide further insight into the evolving mortgage market
- provides insight into emerging trends in the Canadian residential mortgage industry
The annual report is complemented by a quarterly dashboard that provides updated data and highlights of market trends. The dashboard helps fill housing market data gaps by providing the latest trends and data in the mortgage industry.
