Risk of mortgage defaults puts spotlight on Canadian non-bank lenders
Small, loosely-regulated lenders in Canada who rode a pandemic housing boom to offer mortgages at high interest rates are now showing signs of stress as a spike in living costs pushes some homeowners toward a default. Data from the Canada Mortgage and Housing Corp shows that nearly one per cent of mortgages from private lenders were delinquent in the third quarter of 2023 compared with the industry-wide rate of 0.15 per cent. Private lenders, which are overseen by provincial governments, face fewer regulations and unlike the major banks, do not require that clients take federally-mandated mortgage tests that ensure they can make payments even if rates go up.
