Despite the decline, private mortgages remain an important financing channel for borrowers who cannot access traditional credit. FSRA noted that private lending continues to carry higher risks for both borrowers and investors, citing shorter loan terms, higher fees, limited refinancing options and, in some cases, insufficient exit strategies to transition back to traditional financing.
Read more: Understanding Mortgage Investment Corporations: A guide for financial advisors in Canada
“Private lending plays an important role in Ontario’s mortgage market, particularly when borrowers can’t access traditional financing,” said Antoinette Leung, FSRA’s executive vice president of market conduct. She added that the regulator’s objective is to ensure both borrowers and lenders understand the risks and receive suitable recommendations from licensed mortgage professionals.
The report showed regional variations. Private mortgages made up 17.3% of all mortgages in the Greater Toronto Area and 15.7% in Ontario’s Central Region. In terms of loan value, the Southwest Region and GTA recorded the highest shares, at 13.2% and 13.1%, respectively.
FSRA’s consumer research underscored the financial strain faced by some borrowers. Statistics Canada data cited in the report showed that the mortgage delinquency rate among non-bank lenders rose to 0.20% in the third quarter of 2024, up from 0.14% two years earlier. Mortgage Investment Entities recorded the sharpest increase, with delinquency rates rising to 1.22% from 0.76% over the same period.
