Connect with Karen - Call: 647-781-6242 Email: kparrott@smgbroker.ca

Best Rates

TermTypeRate
1 YearFixed Closed6.59%
2 YearFixed Closed5.94%
3 YearFixed Closed4.99%
4 YearFixed Closed5.14%
5 YearFixed Closed4.94%
Secured Line of CreditOpenPrime + .50%
5 Year (Prime 7.20% less 1.10%) VariableClosed6.10%

Quick Mortgage Calculator

Mortgage Amount:
Amortization:
Rate:

Request a Call back

We would love to hear from you! Please fill out this form and we will get in touch with you shortly.

Bank of Canada Announcement and New Mortgage Agent Licensing Requirements

Facebook
Twitter
LinkedIn

As economic conditions influence continuous change in the lending market, private mortgages continue to gain significant traction. Canadian home buyers and home owners alike have been paying close attention to the Bank of Canada’s series of rate hikes since March 2022, which continues to drive up the costs of borrowing.

Even before the central bank’s recent efforts to curb inflation, borrowers began looking at private lending as a viable financing option. The dollar value of private mortgages in Ontario increased by 72% to $22.4 billion in 2021 from $13 billion in 2019, according to a report by the Financial Services Regulatory Authority of Ontario (FSRA). In recent years, mortgage regulations, like the stress test, have gotten stricter, mortgage insurance rules have changed, and the way we work is different.

This has led to a growing number of Canadians not being able to borrow through traditional lenders or banks. These Canadians—with challenged credit, untraditional income, or for another reason can’t secure traditional financing—are realizing more and more that a conventional bank mortgage won’t work for them. The Canada Mortgage and Housing Corporation (CMHC) recently reported that, in 10 quarters through September 2022, private mortgage market share surged 45%—meaning that about one in 10 Canadian mortgages is private.

With alternative financing filling in the financing gap left by traditional lenders, private lending expertise is a must-have. Mortgage professionals must be able to educate their clients on how this flexible and fast-growing solution can work for them—or leave borrowers’ needs unmet.

Agents who are comfortable with both traditional and private lending will provide the best possible service and advice to their clients. This was evident following the pandemic when many borrowers were shut out by the banks after losing their jobs, moving out of urban hubs, or taking the leap into gig work or self employment.

In April 2023, the Ontario government and the FSRA implemented a new two-tiered broker accreditation for mortgage agents and introduced enhanced educational requirements for agents working with private mortgage lenders. These new learning mandates are intended to ensure that agents are providing appropriate mortgage advice, especially in the private lending space. This separate accreditation is called “Mortgage Agent Level 2 License”, without it, no mortgage agent is lawfully able to acquire a private mortgage for anyone. Also by law, agents must have this in all communication outlets along with their License number and Brokerage License number that supports their licenses. To clarify further, a Mortgage Agent Level 2 License allows the agent to broker all mortgage types from Traditional Banks, Alternative Banks to Private Lenders.

These new educational requirements are intended to make the mortgage space safer for all especially for those in need of a mortgage and fall short of being approved with traditional bank mortgages. It is usually used as a great short term tool (sometimes longer) until clients can fix their shortfalls. Whether it be bad credit, short income requirements etc. and as long as there is a good exit plan in place which properly licensed mortgage agents can help implement.

On Sept.6/2023, the Bank of Canada held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. The next scheduled date for announcing the overnight rate target is October 25, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.

Sources: CMI, Bank of Canada

Karen Parrot
Logo