(Toronto) Canadian mortgage brokers say home buyers are increasingly looking to credit unions and private lenders for mortgages as rates rise.
Posted 1:03 pm
These experts note that Canadians are now more attracted to these alternative lenders than ever before as fixed mortgage rates in many provinces and territories have reached 4.0% threshold in recent months and slightly exceeded.
Borrowers must now qualify for a mortgage at a higher rate, as the eligibility rate on uninsured mortgages in Canada’s stress test is two percentage points higher than the contract rate, i.e. 5.25%, whichever is higher.
Tsonto-based mortgage broker Sung Lee says interest in mortgages from alternative lenders is growing, as customers looking for a five-year fixed-rate loan should now qualify for 6.0% or 6.5% through traditional lenders.
When these customers visit credit unions, Lee finds that they can only qualify with a one-point point along with their five-year contract rate or contract rate when applying for an adjustable rate mortgage.
Credit unions and private lenders accounted for 3.7% of the country’s mortgages last year, but have already processed 6.7% of activity so far this year, according to insurance and finance website RatesDotka.
