The Canadian dream of owning a home is driving some to agree to exorbitant mortgage rates from the world of shadow lending. A Reuters report says that while home prices have been increasing, mortgage lenders have become more conservative and regulators have tightened lending restrictions, meaning that some buyers have taken on home loans at high rates. According to mortgage broker Lou Perrotta 20 to 30 per cent of his mortgage book is through private lenders, including his own money, amounting to up to $5 million of his $20 million of annual business. Many investors are seeing private lending as a high yield option often returning 9 per cent or more. Although this part of the mortgage sector is small, around 5 per cent is estimated, it still represents a potential risk as economic conditions, including interest rates, inevitably change. 

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