There is pressure to lower interest rates, but it isn’t coming from the brokers, says private lenders.
“We’re not getting necessarily pushback from the brokers in terms of our pricing; but we have lowered our pricing in the last year,” says Rajan Kaushal, president of Tribecca Finance Corp. “We’ve done it to be as competitive as we can be – because there is a lot more competition in our industry.”
In terms of percentages, that translates into as much as 1% to 2% on a typical product, Kaushal told MortgageBrokerNews.ca
“We’ve lowered it much more in the last three years; I think we’ve gotten to a place where we won’t see rates going too much lower on our end,” says Kaushal, “because as a private lending company, we’re obviously going to be higher than the banks, and where we are at right now.”
While more competition in the lending sector is good news for brokers – as they now have more access to capital on the private side – there has also been a rise of private individuals who are providing loans.
And while the returns are good for the investor and the rates too good to be true for the buyer, there are potential pitfalls.
“These individuals may feel that mortgage investments are very safe,” says Kaushal, “but they have to be very, very careful with the mortgage brokers, because the private person doesn’t have enough experience in these instances, and is relying on the broker for the underwriting. The broker needs to be comfortable enough to make sure it is the right investment for that individual.”