Private and MIC lenders are reporting a rising number of high-quality borrowers
They were once viewed as so-called “lenders of last resort” in Canada’s mortgage market, entities that borrowers would only use when they had exhausted all other available options.
But a sea change over the past decade has seen the popularity of private lenders and mortgage investment corporations (MICs) soar – and those companies are reporting growing numbers of customers with high credit scores.
That shift has arrived partly because of tighter lending standards among Canada’s institutional lending giants, with the federally mandated mortgage stress test making it harder for even creditworthy borrowers to qualify for those mortgages.
Those lenders have also become increasingly strict about income verification, making it difficult for borrowers with complex incomes to meet requirements irrespective of their credit score – while some are now applying closer scrutiny in lending to individuals employed in tariff-impacted industries.
Mortgage brokers, too, are increasingly aware of the need for alternative and private solutions for clients who might previously have qualified for mortgages at larger banks, according to Alta West Capital chief sales officer Armando Diseri (pictured top).
“Everybody had a preconceived notion that the private space is for the people that have bad credit and can’t qualify at the bank. It’s not necessarily the case,” he told Canadian Mortgage Professional.
“We have Beacon scores that are just under 700. And that tells you that these are not people who can’t pay their bills. They just can’t, one way or another, show their income or qualify at traditional banks. So they need an alternative. They’re looking for financing.”
Dabble Capital’s Benjamin Sammut says institutional interest in mortgage investment corporations is growing, with stricter lending rules likely pushing borrowers to private lenders.
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 14, 2025
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A temporary measure, not a permanent lending solution
The growth of the private lending sector in recent years has also seen competition increase, leading to more attractive rates and terms – with some MICs and private lenders even actively targeting prime borrowers with competitive offerings.
But fees and interest rates are still generally higher with private lenders and MICs compared to traditional banks, and many borrowers only use those lenders as a short-term bridge until they can refinance with a traditional lender.
That higher cost is seen as a temporary expense to achieve a specific goal, such as closing a purchase or consolidating debt, and Diseri emphasized that brokers should approach the space with that in mind.
“At the end of the day, if you really want to be that true mortgage professional, you need to know what an A product is, a B product, and the private space,” he said. “And when you’re dealing with a client, make sure you’re well-versed in all three and you know how to position that client not only for the initial mortgage, but how to get them to the next stage.
“Really, that’s where professionals today need to really look at their business and look at where the opportunities are. And I think that space is only going to continue to grow.”
Current turbulence could bring even more borrowers to private space
Ongoing economic uncertainty and tariff turmoil means mainstream banks are unlikely to relax their lending requirements anytime soon, even as business owners and investors – in addition to homeowners facing financial stress – could see urgent need for bridge financing.
What’s more, individuals may want to tap into home equity for liquidity in challenging economic times – and private lenders and MICs could fill that gap if banks or other prime lending institutions are hesitant.
For Diseri, those developments are only likely to expand the reach of private lending further. “I think that’s a trend that we’ll continue to see going forward as we evolve and as it gets more prescriptive and restricted on the regulated side of institutions,” he said.
“More and more people will trickle down into the private space and brokers who have never done a private deal before or dealt with a MIC are reaching out and learning how to put a deal together, how to position themselves with their clients, and how to work out an exit strategy for that client to graduate them from a private lender for a year or two to a regulated institution.”
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