Mortgage Renewals in 2025: A Catalyst for Private Lending and MIC Growth?
As 2025 unfolds, the Canadian mortgage landscape is experiencing one of its most significant shifts in over a decade. A large volume of mortgages—estimated at over $315 billion—is coming up for renewal this year. For homeowners who locked in ultra-low rates between 2020 and 2021, the financial reality of renewing at current market rates is prompting tough decisions.
While some borrowers will remain with traditional banks, a growing number are turning to private lenders and Mortgage Investment Corporations (MICs) to bridge gaps in affordability, qualify outside conventional underwriting, or gain time before committing to long-term financing. This evolving demand is reshaping lending trends across the country, and MICs are well-positioned to absorb and respond to this opportunity.
Understanding the 2025 Mortgage Renewal Wave
Between 2020 and 2021, Canadian homeowners took advantage of historically low interest rates—some below 2%—on fixed five-year terms. Those terms are expiring now, and the reality of current rates, hovering closer to 5–6%, has created payment shock for many.
While the Bank of Canada has introduced rate cuts in 2025 to stimulate the economy, these adjustments are modest in comparison to the higher borrowing costs now facing many households.
Borrowers renewing in 2025 fall into a few broad categories:
- Those who can afford the higher payments and renew directly with their lender
- Those who qualify for traditional refinancing but wish to shop for better terms
- Those who can’t qualify under stricter debt service ratios or credit criteria and need alternatives
This last group represents a growing segment of borrowers that private lenders and MICs are increasingly serving—especially in markets like British Columbia, where real estate values remain high, and housing affordability continues to strain many buyers and owners.
Why Private Lending is Gaining Traction
The traditional mortgage system has its limits—particularly when it comes to flexibility. Many borrowers today face barriers such as:
- Reduced income from job changes, entrepreneurship, or commission-based roles
- Higher debt-to-income ratios due to inflation and living costs
- Credit challenges stemming from short-term financial strain
This is where private mortgage lending becomes essential. Unlike banks, private lenders can evaluate the full picture of a borrower’s situation and offer short-term financing that provides breathing room. Loans are often interest-only and based primarily on equity, not income.
MICs—licensed mortgage investment companies that pool investor funds to lend primarily on residential properties—are among the most active players in this space.
For investors, this growing demand translates into potential for higher yields and more diversified portfolios. For borrowers, it offers a lifeline when conventional options fall short.
How MICs Are Positioned to Benefit
Mortgage Investment Corporations are seeing increased deal flow from borrowers navigating renewals. These are often individuals with:
- Sufficient equity in their homes (typically 25–40%)
- Incomes that don’t meet bank stress test criteria
- A need for 6 to 24 months of flexible financing
The rise in these situations has made bridge loans, renewal refinancing, and equity take-outs key parts of many MIC portfolios in 2025.
Additionally, MICs are adjusting their structures and underwriting approaches to meet this demand responsibly:
- Many are tightening their loan-to-value ratios to reduce exposure in a slower market
- Portfolios are increasingly diversified across geographic regions, borrower types, and property uses
- Some MICs are actively scaling investor capital to support growing loan origination volumes
These adaptations not only protect the integrity of the funds but also enable MICs to continue offering stable returns—often in the 8% to 11% range—to their investors.
Impacts on British Columbia’s Real Estate Lending Market
British Columbia, one of Canada’s most dynamic housing markets, is at the heart of the mortgage renewal story. Homeowners in cities like Vancouver, Surrey, Kelowna, and Victoria are among those most affected by rising renewal rates due to:
- High home values (and large mortgage balances)
- Significant numbers of homeowners who bought or refinanced between 2020–2021
- A sizeable self-employed population that often struggles with bank underwriting
As borrowers look for fast, flexible, and short-term mortgage solutions, MICs in British Columbia are responding with localized lending strategies.
Some funds are offering 6-month to 1-year renewal bridge loans secured by first or second positions, allowing borrowers time to reorganize their finances or reposition for a bank mortgage once rates stabilize further. Others are working with mortgage brokers and advisors to create custom lending solutions that align with regional needs.
For real estate investors or professionals who understand the local landscape, this creates opportunities for capital deployment that balances income generation with responsible risk exposure.
Why Borrowers are Choosing MICs in 2025
Beyond access, many borrowers are choosing MICs for the speed and certainty of execution. In competitive real estate environments—or during a stressful renewal period—waiting weeks for traditional bank approval can be impractical. MICs often offer:
- Faster funding timelines (in some cases, under 10 business days)
- Simple documentation processes
- Customized repayment structures
- A defined exit strategy
This agility makes MICs attractive not only to those who don’t qualify traditionally but also to those who could—but prefer short-term flexibility before re-entering the long-term fixed-rate market.
For example, a self-employed homeowner in Vancouver may choose to renew with a MIC for 12 months, lock in a higher but manageable interest-only payment, and then refinance with a traditional lender once their financials are optimized.
The Investor Opportunity in a Shifting Credit Environment
Mortgage Investment Corporations are designed to generate income from interest-bearing mortgages, typically issued to borrowers who can’t—or choose not to—use traditional lending channels. In 2025, that borrower base is growing, and MICs with the right structure are stepping in to meet the demand.
The current wave of mortgage renewals creates a fertile environment for MICs to:
- Increase loan originations with well-collateralized assets
- Maintain strong interest spreads due to limited conventional credit access
- Deploy capital efficiently in short-duration loans, reducing interest rate risk
MICs that adopt conservative lending practices—such as focusing on first-position loans, maintaining low loan-to-value (LTV) ratios, and keeping portfolios diversified—are particularly well-positioned to deliver stable income while managing risk.
Key Risk Factors to Consider
Despite the potential, MIC investing is not without risks. As the market adjusts, the following considerations are top of mind for both fund managers and investors:
1. Property Value Stability
If home prices fall significantly, the collateral supporting each loan may erode. This is why many MICs are lowering their maximum LTV thresholds and avoiding overexposure to one market or borrower segment.
2. Borrower Repayment Risk
Borrowers transitioning from sub-2% rates to 6%+ interest environments may face payment strain, especially if their incomes have not kept pace. MICs mitigate this by:
- Conducting robust underwriting
- Requiring significant equity
- Structuring interest-only loans to reduce monthly obligations
3. Liquidity Management
In volatile markets, access to liquidity becomes critical. MICs with strong reserve policies and clear redemption timelines are best equipped to manage investor capital while maintaining lending operations.
How Borrowers and Investors Both Benefit
A key strength of MICs is their ability to create mutually beneficial relationships between borrowers and investors. Borrowers receive fast, flexible financing when banks can’t deliver, while investors earn income from the interest payments those borrowers make.
When managed effectively, this model thrives in market environments where conventional systems are strained—which is precisely the climate that 2025 presents.
Versa Platinum works with MICs that prioritize sustainable growth, disciplined lending, and transparent investor reporting. This ensures alignment between borrower needs, investor goals, and long-term fund performance.
The Road Ahead
As the year progresses, it’s likely that:
- Bank lending criteria will remain tight
- A meaningful portion of the renewal market will seek private financing
- MICs will continue refining their risk frameworks to protect capital and maintain yields
For investors looking to build income portfolios that reflect today’s realities, Mortgage Investment Corporations represent an increasingly valuable asset class—particularly in British Columbia, where real estate continues to shape the financial landscape.
Frequently Asked Questions (FAQs)
What is a Mortgage Investment Corporation (MIC)?
A MIC is a Canadian investment vehicle that pools funds to lend mortgages—primarily to residential borrowers who don’t meet traditional bank criteria. MICs earn income through interest payments, which is then distributed to investors.
Why are MICs seeing growth in 2025?
A historic wave of mortgage renewals is underway in 2025. Many borrowers can’t meet current bank requirements and are turning to MICs for short-term financing. This is creating new demand for private lending solutions.
Are MIC investments safe?
While MICs offer attractive returns, they carry risk like any investment. The quality of the underwriting, property collateral, and borrower vetting plays a key role in managing risk. Diversification and conservative lending practices are essential.
Can MICs be held in an RRSP or TFSA?
Yes, many MICs are eligible for registered accounts, allowing you to earn interest income tax-free or tax-deferred depending on the account type.
How are returns paid to investors?
Most MICs pay monthly or quarterly distributions. Returns are typically between 8% and 11% annually, depending on the risk profile and performance of the mortgage portfolio.
Is there a minimum investment?
Minimums vary, but private MICs generally require investments between $10,000 and $50,000. Publicly listed MICs can often be accessed for less through the stock market.
How do MICs handle liquidity?
Private MICs usually have defined redemption policies. Investors may need to provide notice and wait for a scheduled redemption period. Liquidity varies by fund and should be confirmed before investing.
Final Thoughts
The 2025 mortgage renewal cycle is a defining moment for both borrowers and lenders. As banks apply pressure through strict lending criteria, the role of private lending and Mortgage Investment Corporations becomes increasingly vital.
For investors, this is not just a short-term opportunity—it’s a chance to participate in a growing segment of the real estate lending market that offers compelling yields, asset-backed security, and a meaningful impact on real-world financial needs.
With the right guidance, due diligence, and alignment of goals, MICs can serve as a strong, income-focused component of a diversified portfolio. At Versa Platinum, we continue to monitor market trends, assess fund performance, and support clients seeking intelligent exposure to Canada’s evolving credit environment.
