Subprime borrowers have had a harder time getting a loan from a bank over the past decade, as federal mortgage rules got tougher.
That is the finding from a new report from Canada Mortgage and Housing Corp that looks at the growth of alternative lenders such as mortgage investment entities and private lenders.
The report analyzes the alternative lenders and their borrowers’ ability to exit the high-interest loans.
Alternative or subprime lenders offer more expensive, higher-interest, short-term loans to borrowers with weak credit. These borrowers are unable to qualify for a cheaper mortgage from a chartered bank and typically use the subprime loan as a stopgap measure to make their mortgage payments as they improve their creditworthiness.
Source: The Globe and Mail [$]