Homeowners using alt lenders are struggling to graduate to mainstream mortgage providers
Homeowners are increasingly relying on private mortgage lenders due to high interest rates and falling home values. Many borrowers are unable to qualify for traditional mortgages, leading to longer terms with alternative lenders. This trend raises concerns about the financial stability of these homeowners and the potential impact on the broader economy.
- ▪Private mortgages are becoming more common as homeowners struggle to qualify for traditional loans.
- ▪The cost of private mortgages is significantly higher, with rates often exceeding 6 percent compared to around 4 percent for traditional mortgages.
- ▪A growing number of borrowers are renewing with private lenders instead of transitioning to traditional mortgages, indicating increased reliance on these higher-cost loans.
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Open this photo in gallery:A neighbourhood on Burnaby Mountain in Burnaby, B.C. in June, 2024. Higher-risk nature of private mortgages, also known as alternative mortgages, mean they’re significantly more expensive.DARRYL DYCK/The Canadian PressShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountHomeowners are turning to private mortgage lenders more often and staying with them longer as higher interest rates and falling home values see borrowers failing to qualify with traditional lenders.
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