More Canadians are getting mortgages outside the big banks. Here's what that means for borrowers

The latest figures show non-bank mortgage lenders, including mortgage finance companies, credit unions and other financial institutions, have continued to expand their share of outstanding residential mortgages.

That doesn’t necessarily mean Canadians are turning to riskier lenders. Instead, industry experts say today’s mortgage market offers borrowers more options than ever before, particularly as affordability pressures encourage people to shop around rather than automatically renewing or borrowing with their primary bank.

Non-bank doesn’t always mean “alternative”

One of the biggest misconceptions about Canada’s mortgage market is that every lender outside the major banks is an “alternative” lender.

In reality, the non-bank category includes a wide range of institutions. Credit unions, mortgage finance companies and trust companies all fall outside the traditional Big Six banks, yet many offer conventional mortgages that compete directly with bank products.

Many of these lenders don’t operate large branch networks. Instead, they often work through mortgage brokers, allowing borrowers to compare products from multiple lenders without visiting each institution individually.

For consumers, that can translate into greater choice and savings. Depending on the lender, borrowers may find different rate offerings, more flexible underwriting, or mortgage features that better suit their circumstances.

Skip the bank-hopping. If you want to secure a better mortgage rate, a good place to start is shopping around and comparing rates from Canada’s biggest banks and best lenders. However, doing so takes research, time and effort that you might not have, especially if you’re working full time — let alone if you have child care responsibilities. You can skip the bank-hopping and shop for the best mortgage rates using online mortgage tools, like Homewise. Homewise lets you compare rates from 30+ lenders with one simple application — getting you the best rate in minutes. Get personalized mortgage options from Homewise

Shopping around has become more important

The growing role of non-bank lenders comes as Canadians face a mortgage market that’s become far more complex than it was just a few years ago.

While interest rates have eased from their recent highs, many homeowners renewing mortgages today are still facing significantly higher borrowing costs than when they first locked in their loans. The Bank of Canada’s benchmark policy interest rate currently stands at 2.75%, down from its peak but still well above the ultra-low rates many borrowers became accustomed to during the pandemic.