Stocks in Canadian mortgage lender Home Capital recovered some of their lost value Thursday following a 64 per cent slump on the Toronto Stock Exchange in the previous session.
The firm confirmed that it has received a $2 billion line of credit for its Home trust division from a major institutional investor, revealed as the Healthcare of Ontario Pension Plan; and that it intends an initial draw of $1 billion.
The loan comes with a high cost; a non-refundable $100 million commitment fee and 10 per cent interest on any outstanding balance plus 2.5 per cent for undrawn funds.
The line of credit is secured against a portfolio of Home Trust residential mortgages.
Mortgage insurer Genworth Canada has made a statement on the development, detailing its exposure to Home Trust’s mortgage book.
It says that Home Capital originated mortgages make up approximately 1 per cent of Genworth Canada’s overall business and that those loans have a delinquency rate lower than the overall 0.21 per cent rate across the loans insured by Genworth Canada.
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