June 22, 2022
OTTAWA (ON) – There have been several news articles recently published referencing Magenta’s decision to restrict loan applications to those with funding dates after September 1st, 2022. We would like to clarify the reasoning behind our strategic business decision.
Magenta was created almost three decades ago to help Ontario families own their homes and to provide a safe, dependable investment for investors. We underwrite residential mortgages falling just outside of increasingly elevated and rigid institutional underwriting criteria. The benefit to borrowers and our investors is optimized when our lending capacity is fully utilized as is currently the case.
Accordingly, our decision to reduce our lending activity from the record highs achieved in Spring 2022 was not connected to the perceived softening of the broader real estate markets, but rather was solely a function of our finite lending capacity.
Current market conditions create an opportunity for investors, with yields rising and mortgage lenders able to be that much more stringent in their lending standards. Any development that increases the size and quality of the alternative mortgage market, is positive for us and creates an opportunity, as reflected in the spike in investor return we achieved in the aftermath of the 2008 financial crisis. Our lending capacity grows daily from an influx of new investment capital, attracted by our unbroken 28-year track record of strong investor returns.
Magenta will continue to accelerate its lending activities in the months and years to come.
For more information:
Nathalie Rodrigues, Director Product Marketing