Ontario at a Glance
Home to 38.7% of Canada’s population, it is no wonder that Ontario accounts for over 38% of all new housing starts and construction in Canada. With the Government of Ontario projecting Ontario’s population to increase from 14.6 million in 2019 to 19.2 million by 2046, and with net migration accounting for 83% of the population growth during this period, Canada’s most populous province will continue to lead the country in real estate activity.
While the Toronto housing market will naturally be top-of-mind when thinking about places to buy a home, increasing numbers of homebuyers are looking outside of the big cities. A Fall 2020 survey by RE/MAX found that 32% of Canadians no longer want to live in large urban centres, and that 48% want to live closer to green spaces. This suggests activity in suburban areas will remain strong into the future.
2020 saw a large dip in the number of mortgage registrations, with only 274,510 mortgage registrations from January-July 2020, the lowest amount in six years. However, the total dollar value of mortgages registered increased $13.1 billion from last year’s period, to a total of over $126.5 billion from January-July 2020 in Ontario alone. Looking into October 2020, the Ontario Real Estate Association found that residential sales increased 26.5% compared to October 2019, and the average price of a home increased by 17.2% year-over-year to $742,101. Meanwhile, active residential listings decreased by 24.7%.
Mortgage Lenders in Ontario
With such a bustling real estate market comes with a multitude of mortgage lenders for homebuyers to choose from. Naturally, Canada’s Big Banks (RBC, TD, Scotiabank, CIBC, and BMO) operate in Ontario and are also the largest lenders: The Big Five held 72.6% of all mortgages in Ontario in 2018. Other banks accounted for 7.7%, credit unions made up 6.1%, while B Lenders such as monolines and trust companies made up another 6.1%. Finally, private lenders accounted for 6.7% of all mortgages in Ontario.
Market Share by Mortgage Value in Ontario
|Ontario||Toronto||Non-Big 8 Markets|
|Big Five Banks||72.6%||74.0%||71.3%|
Source: Teranet Market Insights Report - March 2019
Looking specifically at Toronto, the numbers dramatically change. The Big Five Banks hold 74% of all mortgages in Toronto, with other banks, such as HSBC, at 8.7%, credit unions at 2.9%, and private lenders at 8.9%. What stands out is the much lower market share that credit unions have, which is half of their province-wide share.
The opposite is true when we look at Ontario’s smaller real estate markets. Outside of Ontario’s Big Eight Real Estate Markets (Toronto, Ottawa, Mississauga, Brampton, Oakville, Hamilton, Vaughan, and Markham), the Big Five Banks have 71.3% market share, credit unions at 8.6%, and private lenders at 6.1%. Credit unions are more popular in smaller markets than they are in Toronto, while private lenders have a slightly lower share.
Private lenders are also more popular in Toronto compared to Ontario as a whole. This may be due to higher house prices in Toronto. The average mortgage held at a private mortgage lender is $254,986, while the average mortgage held at a bank is $220,650. People turned down for a mortgage by a bank may be turning towards private lenders as an alternative.
Increasing home prices may also attract the attention of private lenders as homeowners’ equity rises with prices. Those seeking to unlock their home’s equity can find the numerous numbers of private lenders to be enticing, however, they can come with much higher mortgage rates along with additional fees, and negative changes in housing prices can leave you underwater.
With the Greater Toronto Area projected to grow by 36.7% to 9.5 million by 2046, and with the GTA estimated to account for 49.8% of Ontario's population, alternative and private lenders will play an increasingly larger role in the GTA.
Demographics also play a large role in what kind of mortgage lender a homebuyer will choose to work with. 21.3% of Generation Z in Ontario (those under 24 years old) have their mortgage through a private mortgage lender, compared to only 5.7% of Millenials.
Mortgage Lenders by Demographic in Ontario - 2018
|Big Five Banks||Credit Unions||Other Banks||Private Lenders||Trust Company|
|Gen Z (Under 24)||55.9%||2.2%||16.7%||21.3%||3.9%|
|Gen X (40-54)||71.2%||3.2%||8.8%||5.6%||11.1%|
|Baby Boomers (55-73)||73.9%||3.7%||8.0%||6.1%||8.3%|
|Above 74 years old||75.7%||4.6%||7.3%||6.4%||6.2%|
The Big Five Banks are RBC, TD, Scotiabank, CIBC, and BMO. Source: Teranet Market Insights Report - March 2019.
Ontario-Only Mortgage Lenders
Some mortgage lenders are only available in Ontario. This is most commonly the case for credit unions, who are provincially regulated. FirstOntario Credit Union, Alterna Savings, Community Trust, DUCA, Kawartha Credit Union, and Meridian are credit unions that only operate and originate mortgages within Ontario. Alterna Bank, a subsidiary of Alterna Savings, offers mortgages to all provinces, excluding Quebec.
Mortgage Brokers in Ontario
There were over 1,600 licensed mortgage brokers and 12,000 licensed mortgages agents in Ontario in 2018 by the Financial Services Commission of Ontario. This includes over 1,200 principal brokers. The large number of mortgage brokers opens up plenty of options for you, making it easier to get the best mortgage rate in Ontario. 61% of first-time homebuyers consulted with a mortgage broker, while 39% obtained a mortgage through their mortgage broker. Mortgage brokers can not only make the mortgage process easier, they may also be able to access lower mortgage rates through their network of lenders and through negotiating on your behalf.
Some major mortgage brokerages in Ontario are Dominion Lending Centres, Mortgage Architects, The Mortgage Centre, CanWise Financial, Invis, intelliMortgage, Northwood Mortgage, and Butler Mortgages.
Ontario Mortgage Lender Regulations
Chartered banks, including banks in Ontario, are federally regulated. Federal regulators include the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OFSI).
In Ontario, credit unions and mortgage brokerages are regulated by the Financial Services Commission of Ontario (FSCO), now known as the Financial Services Regulatory Authority (FSRA).
Private mortgage lenders do not need to be licensed in Ontario if they source through a licensed mortgage broker, however private lenders dealing directly with the public will need to be licensed.
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