As the sector's growth continues, regulatory attention is intensifying
Mainstream institutional lenders are continuing to tighten their lending criteria – and that means a growing number of borrowers are gravitating away from the space and towards private mortgages, a trend that shows no sign of slowing.
As of 2023, private lenders made up 16.8% of the total number of mortgages across Ontario, a jump from 13.5% in 2022, according to the Financial Services Regulatory Authority of Ontario (FSRA).
The regulator will be maintaining its focus on the private lending space for the foreseeable future, its head of financial institutions and mortgage brokerage conduct Antoinette Leung (pictured top) told Canadian Mortgage Professional, because of an expected further uptick in activity in the sector.
“We expect [tighter mainstream lending rules] will continue to be the case, and the percentage market share of private lending is going to be staying pretty steady,” she said. “Our focus is going to continue to be private mortgage brokering, so how brokers are making that recommendation – both to the borrowers and to the lenders.”
FSRA understands the important role that private mortgages play in the current market, Leung said, particularly because of the increasing difficulties many borrowers are facing when they try to find a mortgage solution with other lenders.
Ongoing economic turbulence, possible pain for borrowers when their mortgages come up for renewal at higher rates, and a sharp rise in mortgage delinquencies are likely to only add to those challenges.
“With so much uncertainty, we’re hearing that there are going to be more consumers who are more vulnerable, older, maybe without steady income, who will need help,” Leung said. “So this sector adds a lot of value, because not everybody can just walk into a bank and get a mortgage.
“For us, the most important thing is that we’re supporting the sector, maintaining the reputation, so that customers actually have the choice and if they need help, they get the help that they want.”
Despite no "renewal cliff" for mortgages, CMHC's Aled ab Iorwerth notes that a weaker economy poses new challenges for renewals. https://t.co/NFdFgvuaOj
— Canadian Mortgage Professional Magazine (@CMPmagazine) June 17, 2025
Regulator once again underlines principal brokers’ responsibilities
That spotlight on private lending has seen the introduction of an additional educational requirement for mortgage agents to transact in private mortgages in Ontario, as well as a flurry of enforcement actions against agents and brokers this year.
The onus, as FSRA and other industry members have repeatedly emphasized, is on principal brokers to make sure their agents are operating in a correct and transparent manner with their clients – and Leung said the regulator will soon be widening the scope of its assessments.
“When we go and assess how a principal broker is supervising their teams, we’re going to start looking at medium and smaller firms because in the past we’ve been focusing on the largest firms,” she said. “That’s what we want to do, just so that with more interaction with the sector we can also clarify requirements and expectations.”
When it comes to a principal broker’s duties, Leung emphasized that mortgage professionals should understand the other directors and officers have equal responsibility – meaning that they should be appointing a principal broker who’s qualified to do the job, if they aren’t the principal broker themselves.
“They also have the responsibility to make sure that that principal broker has the right tools and resources to do the work,” she said, “especially when we’re seeing larger firms where there may be multiple owners and they may hire somebody who’s not related to be the principal broker.
“In those instances, it’s really important for the owners and the other directors and officers to be supporting the principal broker, making sure that depending on the size of the firm they have the right number of staff who support them in the supervision.”
2025 a consequential year for private lending supervision
Toronto could well remain the epicentre of Ontario’s private lending surge. Figures for last year are yet to be released, but in 2023 private options made up 18.1% of the total number of mortgages originated in the Greater Toronto Area (GTA) and 17% of those in the Central Region.
This year, FSRA’s crackdown on private lending impropriety has included a hefty fine for a former Ontario agent for arranging unsuitable high-risk private mortgages and failing to disclose a conflict of interest involving a family member.
The regulator also launched enforcement action against two mortgage agents accused of running an unauthorized mortgage operation and arranging dozens of deals outside their licensed brokerages, funnelling undisclosed fees of almost $200,000 through shell corporations.
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