Canada’s Alternative Mortgage Lenders Enter Merger Wave as Market Conditions Tighten

Toronto — November 21, 2025
Canada’s alternative-mortgage landscape is reshaping quickly as several mid-sized lenders move toward consolidation, aiming to survive slower housing activity, higher funding costs, and tighter regulatory expectations. The latest analysis from Canadian Mortgage Trends confirms that the merger wave is no longer a set of isolated deals — it’s now an industry pattern.

The trend became visible earlier this year when Fairstone Bank and Home Trust Company — operating brands such as Oaken Financial, Home Bank, and Home Trust — completed a high-profile merger that combined two of Canada’s largest non-bank lending platforms. That deal set the tone for 2025: scale matters more than ever.

Since then, consolidation has accelerated.while Neighbourhood Holdings, a Vancouver-based lender, moved to acquire Fisgard Asset Management, one of Canada’s oldest MIC administrators. All three transactions point to a single reality: smaller lenders are under pressure, and bigger balance sheets help absorb today’s operational and regulatory load.

Why Lenders Are Merging Now

At the heart of the consolidation wave is one simple problem: it’s becoming harder to make money as a small, standalone lender.

Funding costs have risen sharply since 2022, leaving thin spreads on alternative and near-prime mortgages. Regulatory expectations — from stress-testing to capital buffers — have become more demanding, while compliance and reporting costs have climbed across the board. For many mid-sized lenders, merging is cheaper (and safer) than maintaining an independent infrastructure.

A slower real-estate market has added another layer of pressure. With fewer transactions, lower loan volume, and more renewal-driven business instead of new purchases, lenders need scale to keep origination and servicing profitable. Larger consolidated firms can pool technology, underwriting resources, treasury management, and securitisation capabilities in ways smaller players simply cannot.

What This Means for Borrowers

For borrowers, especially those who rely on alternative or near-prime lenders, the consolidation trend has mixed effects.

On one hand, bigger lenders typically offer more stability, broader product ranges, and better digital tools. They can continue lending even in tougher market conditions, and they are usually more competitive on pricing when scale improves their funding costs.

On the other hand, fewer players in the market may mean fewer truly niche underwriting programs — particularly for self-employed borrowers, new immigrants, or clients with non-traditional income. As consolidation continues, some of the most flexible programs could disappear or be absorbed into larger, more standardised lending frameworks.

Impact on Brokers and the Industry

Mortgage brokers may feel the effects most directly. Consolidation typically reduces the number of underwriting teams brokers deal with, streamlines approval expectations, and simplifies rate channels. But it also reduces diversity.

In 2026, brokers could see more competitive rate sheets from stronger, merged institutions, but they may also see fewer “yes” options for complex files — the very segment that alternative lenders were built to serve. Many brokers are already watching how lenders change their risk appetite after merging, especially when new capital partners or funding sources come into play.

Industry analysts expect more deals and partnerships in 2026. Smaller regional lenders and MICs may seek joint ventures with banks or fintechs to maintain relevance. Meanwhile, private-capital-backed lenders will likely continue buying up assets that complement their portfolios.

The big picture is clear: Canada’s mortgage-lender landscape is entering its most significant structural shift since the 2017–2019 funding-market stress period. This time, however, the transformation is driven not by crisis, but by long-term economics — and lenders that build scale may end up defining the next decade of alternative lending in Canada.