With major changes in the mortgage industry just around the corner, adapting to the new rules of the game is paramount.
diversified its offerings this year by launching the Street Solutions Program, which is funded through fixed-term GIC products, between the latter stages of Q2 and Q3. The Alt-A program is Street Capital’s inevitable next step after attaining its bank license early this year.
“We’re actually excited about next year from two perspectives,” said Alfonso Casciato, Street Capital’s senior vice president of sales. “We plan on growing our Solutions Program in 2018. I believe the changes through the B20 have expanded our addressable market, so we anticipate another successful year on our addressable market.”
In spite of OSFI’s first incursion into the mortgage industry occurring in October 2016—in what could have even then been construed as a prelude to more regulatory changes—Street Capital had already been contemplating a foray into the Alt-A space.
The new underwriting rules will leave many Canadians scrambling to qualify for the right mortgage, and while those same rules will impact lenders, Casciato says Street Capital recognizes an opportunity when it sees one.
“It’s a program we feel is meeting needs of Canadians who may not necessarily qualify for your standard prime mortgage, and I believe that market needs to be supported as much as the prime market,” he said. “The idea of Solutions was to create our own balance sheet and have access to funds by having a Schedule I bank license.”
Although much of the industry has decried B20, lenders like Street Capital have already found ways to adjust. Others, like Magenta Capital Corporation, expect business to boom. While raising enough capital to meet demand can sometimes be daunting for MICs—for whom B20 has provided fertile ground to swell in numbers—Magenta’s vice president of mortgage operations says that won’t be the case in 2018.
“In the past, raising capital has always been the biggest challenging because it takes time, but with the market conditions the way they are and investors looking for other opportunities, capital has not been our problem and we don’t see it as being a problem in the foreseeable future,” said Denise Buckley.
“From our perspective, it’s a great time for capital because people still see the Canadian real estate market as a secure investment. Because we have a 23-year track record, investors are very interested in partnering with Magenta, which has been wonderful for us. New MICs have come up, but I think investors are savvy and do their due diligence, so it’s been very fortuitous. It’s a great time.”
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