Let’s talk about resilience. Defined as the capacity to withstand or to recover quickly from difficulties, resilience can act as our best tool for borrowers to bounce-back financially when facing adversity in the market. But how does being resilient impact brokers? And lenders?
In the mortgage industry, where the economic conditions are constantly shifting, resilience isn’t just nice to have for lenders and professionals – it’s a must.
At Glasslake, we pride ourselves on providing reliable services designed to help non-bank clients navigate economic challenges with confidence.
In this article, we’ll explore:
1. The impact of turbulent market conditions
2. The importance of having resilient funding partners
3. How to champion your small businesses and investors with solutions that ensure long-term stability and growth
Read more and feel the power of resilience!
Why resilience matters
In the mortgage industry, the ability to turn challenges into opportunities and build a strong foundation for the future is essential for every party involved in the mortgage transaction – from lender to borrower and everywhere in between.
When banks implement stricter lending criteria and reduce financing options, and private entities face liquidity issues, who do brokers and borrowers turn to? Often, the answer lies in the alternative lending space, and with lenders like us.
For alternative lenders, resilience means being prepared to adapt to any economic climate, regardless of fluctuating rates or regulatory changes. And for brokers, it involves thriving during downturns and seeking stable alternative solutions to provide clients with financing options so they can weather fluctuations with ease and confidence.
The choppy waters of alternative lending
Not all lenders are made equal. While alternative lenders often become the go-to choice for brokers during market adversity, not all are equally adept at providing flexible and sustainable financing solutions.
First, let’s address the real challenges within the alternative lending space:
1. Rate rollercoasters: Interest rates have been turbulent since the pandemic. Navigating this means staying sharp and adaptable.
2. Regulation tightening: The rules, like the B20 guidelines, are getting stricter. This means more hoops to jump through for regulated lenders and brokers, and borrowers.
3. LTV cutbacks: Loan-to-value ratios and loan amounts are shrinking, making it tougher for borrowers to get what they need and creating a larger appetite for diverse funding options.
4. Liquidity issues: Private lenders are struggling to keep the cash flowing due to lack of investor funds and an influx of originations from the booming 2020 market.
We’re here to smooth the waters
At Glasslake, we welcome market changes as an opportunity to revisit gaps in the market. Here’s how we are practicing resiliency and turning challenges into long haul opportunities.
1. We’re your small commercial pros: We offer a niche product, one that is hard to come by these days as more lenders pull away from the small commercial space. We offer a wide range of loan amounts from $200,000 to $5 million. There’s a perfect fit waiting for just about everyone. And our minimum credit score requirement? It’s a breeze at just 620+.
2. We focus on the investor and rental segments: We provide term options from 1 to 7 years that align with the goals and timelines of our borrowers, helping them achieve long-term stability and growth in their investments.
3. We have no boundaries on location: We take a strategic approach by examining geographical regions and assessing risk according to the specific profiles of these areas, and not based on just population. It is with this approach that allows us to lend in all primary, secondary, and tertiary markets, without having to use a sliding LTV scale based on location.
4. We maintain loan amounts and LTVs: Unlike traditional lenders who scale back during uncertain times, we are committed to maintaining our loan amounts and Loan-to-Value (LTV) ratios.
5. We continually expand our borrower options: By offering more flexible and accessible loan products, we support a wider range of clients, helping to foster economic resilience and stability across the board.
6. We don’t stress test clients: Since we’re not federally regulated, we’re able to offer smooth and simple qualifying programs that don’t require us to stress test clients.
The real stars of resilience
The alternative lending market is ripe for new players who can offer unique solutions. We see investors and small business owners as the true champions of resilience. And Glasslake’s focus on this segment isn’t just filling a gap in the market, it’s catering to borrowers who might not fit the traditional mould.
With their diverse income streams and solid financial habits, these segments make fantastic clients. Unlike old-school lenders who only have eyes for flawless income verification or perfect credit, we shine a spotlight on these dynamic small business owners who often get overlooked despite their immense long-term potential.
So, where’s that golden potential? Rentals.
1. Shift to Rental Markets: According to the CMHC, big Canadian cities are going rental! In 2022, Vancouver saw 50% of apartments starts within the rental market. Real estate costs are set to peak in 2025, bringing lower interest rates and more borrowers.
2. Economic and Demographic Changes: Cities like Toronto and Calgary are booming with immigration and investments, turning them into rental hotspots. As more immigrants arrive and real-estate projects soar, rental demand will be (and is) inevitably increasing.
Rental properties often outperform owner-occupied markets, showing strong long-term performance. This stability and rental income growth make these investments easy to underwrite for us. By focusing on cash flows and using debt coverage analysis, investors can manage rental property finances effectively. This creates a win-win, benefiting both lenders and borrowers while driving collective growth and resilience.
Key takeaways for Lenders and Brokers
To build resilience and thrive during changing market conditions, here are three things to keep in mind when solutioning for your clients:
1. Think Long-Term: Focus on stability over short-term gains. Offering longer-term loan options and maintaining a strong financial base are crucial.
2. Know Your Clients: Understand your clients’ risk appetites and provide tailored solutions that meet their needs. A personalized approach can boost client satisfaction and loyalty.
3. Strengthen Financials: Ensure your financial practices and funding sources are solid enough to handle economic fluctuations. This will enable you to offer competitive loan products, no matter the economic climate.
All in all, staying strong when securing the best financing for your client means being strategic. By understanding the challenges at hand, seizing those golden nuggets of opportunity, and adopting solid practices, brokers can navigate uncertainty with Glasslake confidently.
Stay tuned for more blog posts from us!
