The total value of private and alternative mortgages in Ontario surged from $13 billion in 2019 to $22.4 billion in 2021, according to the Financial Services Regulatory Authority of Ontario.

The share of private lenders in the province also expanded from 9.3% of funded mortgages in 2019 to 11.6% in 2021. Antoinette Leung, of the FSRA, said that current housing market trends and decreasing purchasing power are fuelling this demand.

Another major contributor was the restrictive underwriting requirements in chartered banks, which have compelled consumers – particularly self-employed professional – to seek funding from alternative sources.

“These are quite well established lenders with sophisticated processes [who] have experience with underwriting all the way down to individuals who may have extra money to invest,” Leung told CBC.

Read more: Consumer education on private mortgages is a must – expert

Consumers who are looking to refinance their loans are also increasingly seeking aid from non-bank lenders.

“I’m seeing people who certainly would have been at the bank not so long ago who just have no choice but to turn to private lending,” said Zahra Marani, managing partner for real estate and private lending At Marani Law LLP. “Not only are we seeing an increase in the need for private funds, we’re also seeing an increase in the rates that are being agreed upon by the borrowers and lenders and the brokers, because it’s costing more to borrow at the banks.”