Driven by the declining approval rates from the big banks, The Greater Toronto Area saw an 8% increase of private lending for new mortgages, according to Reuters.
This comes after Canadian regulators tightened the rules for home buyers, and this could "make the new guideline less effective in mitigating the vulnerability for the financial system as a whole,” the central bank said.
While the shift to unregulated mortgage providers is a concern, the growth opportunities for private lenders are limited, even as their volume remains stable, as the increase is due to the decline in lendings from larger banking institutions.
The central bank said that private lenders would need to improve their lending channels and operations, as well as “materially expand their funding sources" in order to increase their activities further.
British Columbia's housing tax foreseen to affect market prices
National Bank joins the mortgage war
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