Two of Canada’s alternative mortgage lenders are seeing their market values gain thanks to the tighter lending regulations brought in 18 months ago.
Home Capital and Equitable Group have both seen a boost for their share prices following their latest results and both are optimistic about the trajectory of their business amid favourable conditions.
Bloomberg reports that Equitable’s share price was up 16% after its earnings report this week while Home Capital’s price hit a 2-year high after gaining 7.5% ahead of its results next week.
And the alternative lenders say that the customers that come to them because they can’t qualify for a mortgage with the big banks are not sub-prime.
“We certainly have seen our client portfolio quality improve over the last couple of years,” Equitable Chief Executive Officer Andrew Moor told Bloomberg. “The general risk of a house-price correction gets reduced as these rules now get embedded in the system. It’s a structural permanent shift and we will continue to see higher credit quality than we’ve ever had.”
Equitable reported record earnings with principal retail loans outstanding escalating 23% year-over-year to $16.9 billion while commercial loans outstanding jumped 19% to $7.9 billion.
