Alternative Lenders

Alternative Lenders

Interest rates plummeted to record lows at the onset of the COVID-19 pandemic – but now they’re back on the rise across Canada, a trend that’s seeing a marked shift towards the private and alternative lending spaces among many borrowers.

Changes last year to stress test guidelines meant that a growing cohort of borrowers now have to qualify at higher rates than before (the higher of 5.25%, or the contract rate plus 2%) and find themselves increasingly turning to lenders that can often offer flexible solutions.

That trend is likely to continue and grow in the coming years.

“Higher interest rates mean higher qualifying rates for the stress test, so I think that will definitely factor in on people’s buying power with more restrictions on the bank side of things, it is going to open up the private space a lot more.

“The opportunity to grow in this space is going to be great for business going forward. The” A” market is changing, and you need to evolve as well, to get to that “B” space.”

At the end of May around 6.7% of Canada’s mortgage business so far in 2022 came from private lenders or credit unions, a sizeable increase over last year when those lenders made up just 3.7% of overall mortgage funding.

It’s clear that many Canadians’ eyes have been opened to the viability of private solutions, especially as lenders in that space are often able to offer quick turnarounds that sometimes aren’t available through more traditional lenders.

That’s something we’re seeing more of because of the recent rate increase and the higher stress test qualifying rate.

“We can step in and fund deals quickly to help out in the purchasing process. It’s a good short-term solution to get the purchase completed and then work towards getting back to the A space.”

That’s proven popular among borrowers, Thompson said, not least because it means they’re now able to close on a home purchase without losing a deposit, something that can happen when they can’t secure funding from their first-choice lender.

As many lenders become more conservative and ramp up their qualification criteria, Pillar is ready to help borrowers who suddenly find themselves refused a mortgage by those organizations, said Thompson – for instance, in the business-for-self (BFS) arena.

With a chronic lack of supply still a clear problem in Canada’s housing market, the importance of construction is only set to grow in the coming years – and Pillar is well placed to assist borrowers in need of construction financing, Thompson said, with that representing one of the company’s best-established niche products.

“Construction is still going strong,” he pointed out. “We’re a solution-based lender, and we’re here to help borrowers in any situation. If it’s business-for-self, if it’s a quick close, if it’s a construction, there’s plenty we can do to find the right solution.”

Interest rates are rising, and borrowers are finding it more difficult to qualify for a mortgage – not least because there’s little sign that home prices are falling dramatically across most of Canada’s regional housing markets.

Those factors mean that alternative and private lending solutions for Canadians are only set to grow in popularity, according to Thompson, and he said that brokers should recognize the strong potential for business that exists for them in the space.

Sam Ansari


Centum Financial Services L.P. | Sam Ansari About Us Centum Financial Services L.P. is one of Richmond Hill, , Ontario, ’s leading mortgage brokerage firms, offering seamless solutions to all your mortgage needs. Whether you want to buy a new home, set up a business or even refinance an existing loan or mortgage, we offer you the perfect solution to cater to your specific requirement. Customer Oriented Services At Centum Financial Services L.P., we put our customers first and strive to serve them better. Our ever-increasing clientele is a clear indication of our commitment and focus to serve them better. We help our customers pick the right mortgage solutions according to their need, and then personalize them to suit their individual requirements. Our aim is not only to provide the best service but also to establish a long-lasting relation with our customers. Highly Qualified and Experienced Mortgage Staff Our team at Centum Financial Services L.P. comprises of some of the most dynamic and experienced personnel from the mortgage industry, having a thorough knowledge of the Calgary, area. We will provide all the necessary advice and guidance that you might require for your mortgage application, interest rate negotiation, or any other related procedure. We constantly work towards offering you the best solution in the most cost-effective manner. Efficiency through Flexibility The mortgage industry is extremely dynamic and volatile. Rates may change drastically in a matter of hours. Centum Financial Services L.P. is quick to detect such changes and keeps its customers well informed and updated at all times. Our processes and systems are flexible and easily adapt to such fluctuations so that the customer is never at a loss. Industry Leading Products and Services We offer a wide array of products, tools and services that are designed specifically keeping the mortgage industry in mind. Our online tools and calculators take care of all the numbers and calculations involved, quickly and accurately. Centum Financial Services L.P.

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