A report by CIBC World Markets said the overall mortgage market share of alternative lending institutions in Canada has increased from 0.8% during 2008 to 2009, and its expansion rate is also growing at 25% per year.
Deputy chief economist Benjamin Tal credits this growth to stricter bank regulations which lead more Canadians to hunt mortgages in non-traditional lenders. The current total market share of the sector is 2.2%, a figure too small to pose an economic threat.
"We don't want to kill this market because it's a market that is part of a healthy system," he said.
"We just have to make sure that it's not being abused."
Tal said the time to worry is if the alternative lending community starts to occupy 5% market share.
A broker from Mortgage Group in Edmonton shares Tal’s sentiment.
Jason Scott said alternative lenders “provide options for a range of potential borrowers, from people saddled with wobbly credit, to the recently divorced, to the self-employed who draw a smaller income from their business for tax purposes.”
Scott added that about 10% of his clients get mortgages from alternative lenders which are sometimes called "B-lenders" or "C-lenders."
"There's a growing segment of the population where it's harder for them to get qualified with A-lenders," he said. "So, we need these alternative lenders to provide solutions while we're getting them into a position where they can then go back and get the best rates."
Deputy chief economist Benjamin Tal credits this growth to stricter bank regulations which lead more Canadians to hunt mortgages in non-traditional lenders. The current total market share of the sector is 2.2%, a figure too small to pose an economic threat.
"We don't want to kill this market because it's a market that is part of a healthy system," he said.
"We just have to make sure that it's not being abused."
Tal said the time to worry is if the alternative lending community starts to occupy 5% market share.
A broker from Mortgage Group in Edmonton shares Tal’s sentiment.
Jason Scott said alternative lenders “provide options for a range of potential borrowers, from people saddled with wobbly credit, to the recently divorced, to the self-employed who draw a smaller income from their business for tax purposes.”
Scott added that about 10% of his clients get mortgages from alternative lenders which are sometimes called "B-lenders" or "C-lenders."
"There's a growing segment of the population where it's harder for them to get qualified with A-lenders," he said. "So, we need these alternative lenders to provide solutions while we're getting them into a position where they can then go back and get the best rates."
