As homebuyers struggle to break into the housing market, mortgage investment corporations (MICs) are starting to snap up a greater market share of first-time homebuyers.
An MIC pools money from a variety of shareholders and then lends it out as residential or commercial mortgages, or both in the case of some entities.
Any profits return to the investors, who then re-invest the capital. However, in spite of existing in Canada since the 1970s, MICs are relatively obscure to homebuyers and mortgage professionals alike.
That’s why the Ontario Mortgage Investment Companies Association (ONMICA) is hosting its latest Trade Show and Seminar in Toronto on May 8.
“We do it for mortgage brokers and agents to help them better understand the different metrics and what their choices are,” says Diana Soloway, co-president and chief investment officer of Brookestreet MIC, who helps organize the event. “It’s a pure MIC show.”
MICs growing their market share
In spite of their decades-long existence, MICs are still a very small minority of the overall lending pie in Canada, comprising just 1% of all outstanding mortgages, according to Canada Mortgage and Housing Corporation data.
The top 25 MICs command over $10.4 billion in assets under management. By contrast, the Big Six banks alone command a 73% share of the total mortgage market.
But MICs are growing in popularity among new borrowers. CMHC data show that MICs held about 5.3% of newly extended mortgages in the first quarter of 2021. Two years later, that figure had grown to 8%.
For borrowers facing steep payments who don’t want to sell, or homebuilders worried about financing for a new project, MICs can act as a short-term bridge in the absence of traditional finance.
That said, MICs do come with some extra risks for both lenders and borrowers. CMHC data suggests the arrears rates for mortgage investment entities, including MICs and other private lenders, were 0.88% in the second quarter of 2023 — over four times higher than alternative lenders, and over five times higher than those seen at chartered banks.
What to expect at the trade show
At the ONMICA Trade Show on May 8, attendees can mingle with Ontario MIC representatives in one place.
Exhibitors and sponsors include Liahona MIC, RiverRock MIC, Brookstreet MIC, Magenta Capital, Ginkgo MIC, Atrium MIC, Secure Capital MIC, and New Haven Mortgage Corporation.
Speakers include Axess Law CEO Lena Koke and Axiom Innovations CEO Dong Lee.
Attendees can also partake in the Deal Desk, an activity where the show organizers rotate their MIC managers around every 10 minutes for an hour. These managers then show off the sorts of deals they typically run, whether they’re in homeowner mortgages or residential construction, and give attendees a chance to see what they’re all about.
“There’s no filler. We’re not talking about appraisals or anything like that,” Soloway says. “We are just talking about the new obligations, and showcasing different MIC products—and helping them ask the right questions.”
All of this networking gives mortgage professionals a chance to better understand how MICs work. While there are hundreds in the Canadian mortgage market, they all have their quirks. “None of them are the same,” Soloway says. “Everyone has a different ice cream flavour.”
Understanding these quirks is important for any broker, she says, pointing to new guidelines put forward by the Financial Services Regulatory Authority of Ontario (FSRA) in 2023. These guidelines call for mortgage professionals to make detailed notes on why using a specific MIC would be appropriate for a borrower, rather than simply directing them to a MIC in a brokerage’s portfolio of private lenders without a second thought.
“For anyone who wants to be at the top of their game,” Soloway says, “they need to know many different products for many different situations.”
More information about the ONMICA 2024 Trade Show & Symposium can be found here.
Diana Soloway MIC mortgage investment corporations ONMICA the Ontario Mortgage Investment Companies Association trade show
Last modified: April 29, 2024
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