Total mortgages increased slightly in Ontario last year, as growth in the number of traditional mortgages offset a decline in the number of private mortgages, according to a report the Financial Services Regulatory Authority of Ontario (FSRA) released Wednesday.
Private mortgage lenders’ market share fell from 16.8% in 2023 to 15.8% of all residential mortgages in Ontario in 2024.
Among all private mortgage lenders, private entities maintained the largest market share (with a small dip from 2023), followed by individual lenders (who experienced the largest decline in market share) and investment firms (whose market share remained unchanged).
Private lenders have enjoyed significant growth over the past decade, from $11 billion worth of mortgages in 2015 to $32 billion in 2024. Traditional lending grew from $185 billion to $224 billion in the same period.
“Private lending remains an important source of mortgage financing, particularly for borrowers who may not meet the requirements of traditional financial institutions,” the report said.
Conversely, the number of traditional mortgage lenders has decreased from 173 in 2015 to 151 in 2024, including Canada’s top five banks. The number of private mortgage lenders has grown from 1,262 to 1,729 in the same period, peaking in 2022 at 1,961.
While private lending makes up a sizable portion of the mortgage market, financially vulnerable borrowers may face greater risks when taking on private mortgages.
The mortgage delinquency rate for non-bank lenders has increased to 0.2% in the third quarter of 2024, compared to 0.14% in the same quarter in 2022, according to Statistics Canada. Among these lenders, mortgage investment entities had a significantly higher delinquency rate of 1.22% in the third quarter of 2024. Those businesses pool money from investors, from which they issue mortgage loans.
“This increase in the mortgage delinquency rate underscores the growing financial strain on individuals who rely on non-bank lenders, many of whom may struggle with higher interest rates, short-term financing, limited refinancing options and a lack of an exit strategy to transition back to a traditional mortgage,” FSRA said.