(Toronto) Canadian mortgage brokers say home buyers are increasingly looking to credit unions and private lenders for mortgages as rates rise.
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.
