Growing delinquencies and regional trends expose risks
Private mortgage lending in Ontario contracted in 2024 even as overall mortgage activity grew modestly, according to the Financial Services Regulatory Authority of Ontario’s (FSRA) latest annual report.
The regulator said the number of private residential mortgages dropped 5.6% to 65,233, with their total dollar value down 3.7% to $32.0 billion from 2023. By comparison, traditional lenders expanded their share, with the number of mortgages increasing to 348,849 in 2024 from 341,133 the previous year.
As a result, private lenders accounted for 15.8% of all mortgages in Ontario last year, down from 16.8% in 2023, and represented 12.5% of the total dollar value compared with 13.3% the year before, FSRA reported.
Despite the decline, private mortgages remain an important financing channel for borrowers who cannot access traditional credit. FSRA noted that private lending continues to carry higher risks for both borrowers and investors, citing shorter loan terms, higher fees, limited refinancing options and, in some cases, insufficient exit strategies to transition back to traditional financing.
Read more: Understanding Mortgage Investment Corporations: A guide for financial advisors in Canada
“Private lending plays an important role in Ontario’s mortgage market, particularly when borrowers can’t access traditional financing,” said Antoinette Leung, FSRA’s executive vice president of market conduct. She added that the regulator’s objective is to ensure both borrowers and lenders understand the risks and receive suitable recommendations from licensed mortgage professionals.
The report showed regional variations. Private mortgages made up 17.3% of all mortgages in the Greater Toronto Area and 15.7% in Ontario’s Central Region. In terms of loan value, the Southwest Region and GTA recorded the highest shares, at 13.2% and 13.1%, respectively.
FSRA’s consumer research underscored the financial strain faced by some borrowers. Statistics Canada data cited in the report showed that the mortgage delinquency rate among non-bank lenders rose to 0.20% in the third quarter of 2024, up from 0.14% two years earlier. Mortgage Investment Entities recorded the sharpest increase, with delinquency rates rising to 1.22% from 0.76% over the same period.
On the investor side, FSRA cautioned that private mortgage investments carry risks including default, low liquidity and fraud, and may result in partial or full loss of principal.
Ontario’s total mortgage market reached 414,082 loans worth $256.0 billion in 2024, a 0.9% increase in number and a 2.4% increase in value from 2023. The growth coincided with five Bank of Canada rate cuts during the year, lowering the overnight rate from 5% in April to 3.25% by December.
FSRA said private mortgage brokering will remain a focus in its 2024-2025 supervision plan. It also ran a consumer education campaign between December 2024 and March 2025 to raise awareness about the costs and risks of private mortgages and the importance of planning an exit strategy.
