Most recently, alternative lender Equitable Trust reported a $63 million drop in originations for its commercial division, its president telling analysts that the lender’s appetite for Toronto condo development is virtually nonexistent.
It’s not alone, with other lenders, big Canadian banks among them, moving to restrict how much multi-family development deals now go onto their respective books.
The move, even many investors hope, will reduce the size of any correction already in the cards for the GTA’s condo market.
More troubling for individual lenders is the deliberate step many lender have now taken away from extending them mortgages on condo suites.
It means that the prime rates of A lenders are increasingly off the table, but also the near-prime ones presented by alternative lenders.
The dried-up financing opportunities come despite the thousands of condo units expected to hit the market over the next two years. Developers of most of those now under construction have had to meet pre-sale targets as high as 70% to 80% in order bring in the cranes.
The pullback in financing could in fact benefit investors worried that the construction boom threatens their own cash flow potential by creating more rental supply than even the GTA’s five million residents can satisfy.
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