Canadian real estate sales and development soared, and so have mortgage credit needs. New data from Statistics Canada (Stat Can) shows non-bank credit intermediaries (NBCI) have seen explosive growth. Over the past decade, NBCI dealing with mortgages have more than tripled their assets.
Mortgages: NBCIs, MFCs, And MICs
Today we’re looking at NBCIs, something not well known outside of real estate. More specifically, we’re breaking down two segments – MFCs and MICs. Mortgage Finance Companies (MFCs) originate, package, and sell mortgages to regulated financial institutions. MFCs largely rely on banks to fund their operating capital. They also generate a significant amount of regulated bank mortgages. This makes them both a partner, and competition for banks.
Mortgage investment corporations (MICs) have a longer history as big business. These mortgage lenders sell shares or debt to investors, to finance operations. They typically provide short-term loans, secured by real estate. The role of an MIC is largely to provide more flexible financing, with short-turn around times. For the convenience, these lenders charge higher interest rates than traditional lenders.
Canadian MFCs Hold Over $63 Billion In Financial Assets
The assets held by Canada’s MFCs have exploded in growth over the past few years. MFCs held $63.66 billion in assets at the end of 2018, up 10.09% from the year before. Since 2007, MFC assets are 7,606% higher. The average annual pace over growth since then has been 83.38% a year. This segment went from a relatively small industry, to a big one.