As CMI marks a decade in the investment space, we reflect on how Canadian real estate and private mortgage lending have evolved — and the lessons investors can take from these changes. Over the past ten years, CMI has grown from a founder-led start-up to a national platform managing over $1 billion in assets, navigating shifting markets while delivering consistent income for investors. This perspective informs how we evaluate opportunities and manage risk in a dynamic housing market.
Canada’s housing market has undergone a significant transformation over the past decade. Rapid price growth, shifting demographics and evolving regulatory frameworks have reshaped both risks and opportunities. While headlines often emphasize volatility and affordability concerns, seasoned investors recognize that, when approached with the right strategy, Canadian real estate remains a powerful source of competitive income and long-term value.
For institutional and accredited investors seeking predictable income-generating opportunities, private mortgage investments have become an increasingly attractive asset class. Unlike securitized mortgage products, which pool mortgages and sell them as bonds, whole loan investments involve direct ownership of individual mortgages. This direct exposure provides greater transparency and more control over both risk and potential returns.
However, success in this market requires more than simply acquiring loans. Aligning investments with market conditions helps mitigate risk and supports more predictable performance through economic cycles.
What Are Whole Loan Investments?
In the context of private mortgage investing, a whole loan is a single, fully funded mortgage held directly by an investor, as opposed to participation in pooled or securitized products like mortgage-backed securities (MBS). In a securitized structure, investors own fractional interests in a pool of mortgages, with performance tied to the aggregate pool. By contrast, whole loans allow investors to directly own the mortgage asset, retain a claim on the borrower’s interest and principal payments and customize exposure based on credit profile, property type, geography and security position.
The ecosystem that supports whole loan investments consists of lenders, investors and servicers. Lenders originate mortgages, often with the intention of selling them to investors seeking direct exposure to real estate–backed income streams. Investors then purchase and hold these mortgages, earning income directly from borrower repayments. Servicers complete the framework by managing day-to-day administration, from collecting payments and maintaining records to handling borrower communication.
In Canada, the majority of whole loan transactions are concentrated in the residential mortgage space, where strong demand and a highly regulated environment provide stability and transparency. Commercial whole loans are also available, though less common, and generally appeal to investors with a higher risk tolerance and a longer investment horizon.
Overview of the Current Canadian Real Estate Market
Canada’s economy is experiencing a slowdown in 2025, weighed down by ongoing trade tensions, weaker exports and dampened business investment. Gross domestic product (GDP) expanded at a solid 2.2% pace in the first quarter, largely due to US firms front-running anticipated tariffs, then weakened to a 1.6% pace in the second quarter. High tariffs have also contributed to rising inflationary pressures, limiting the Bank of Canada’s (BoC) flexibility to cut interest rates. At the same time, the labour market has been softening, with unemployment edging above 7% for the first time since 2016, excluding the pandemic period, while household spending has been showing signs of caution.
For private mortgage investments, the interest rate outlook is key. Rate cuts would lower debt-service costs and ease pressure on borrowers, but they could also signal a weakening job market, raising concerns about income stability and rising repayment risk. The BoC has already reduced rates by 225 basis points since mid-2024, and markets are weighing whether more stimulus will be needed if job losses deepen.
Policy is also reshaping demand. Ottawa has extended its foreign-homebuyer ban through 2027; British Columbia continues to impose a 20% transfer tax on non-residents; Ontario enforces a 25% speculation tax province-wide; and Toronto has added a 10% municipal levy at the start of 2025. These measures have tempered investor-driven demand, reducing speculative activity. As a result, lenders are seeing a greater share of longer-term, end-user borrowers, which is influencing both loan origination quality and prepayment patterns.
The effects vary sharply by region. Toronto and Vancouver remain supply-constrained, with affordability stretched across much of the population. By contrast, mid-sized and rural markets face less pressure on affordability, though housing activity there is more closely tied to local employment and migration trends.
Key Real Estate Trends Shaping Investment Portfolios
Several forces are reshaping Canada’s housing market and, in turn, the performance profile of whole-loan mortgage portfolios. Chief among them is the persistent imbalance between supply and demand. New housing starts continue to lag population growth, keeping inventories tight and valuations high. This shortage is most acute in urban centres such as Toronto and Vancouver, where demand outpaces supply year after year, underpinning collateral values but also intensifying affordability pressures.
Interest rate fluctuations are another critical factor. After a series of rate cuts through 2024, the BoC has shifted to a holding pattern, and investors remain alert to the possibility of further adjustments. Lower rates ease affordability and spur refinancing. But if job losses mount, prepayments may give way to rising delinquencies.
Demographics are also reshaping demand. Millennials and Gen Z are becoming the dominant cohorts of first-time buyers, with preferences that skew toward smaller, higher-density homes and condominiums in transit-connected neighbourhoods. Meanwhile, immigration continues to fuel housing demand, particularly in large cities, affecting both ownership and rental markets.
Implications for Whole Loan Investments
Canada’s housing and economic landscape shapes the context for whole loan investors, influencing factors such as loan structure, prepayment behavior, and cash flow. Despite a recent cooling in the real estate market, property values in many urban centres remain elevated, supporting stronger loan-to-value (LTV) ratios, improving collateral positions and mitigating potential default risk. For now, that has kept residential portfolios relatively well anchored, particularly in supply-constrained cities such as Toronto and Vancouver.
The bigger question is interest rates. Elevated borrowing costs over the past two years have stretched affordability, especially for households facing higher rates – and monthly payments – at renewal. That stress has increased default risk at the margins, most notably among borrowers with limited income buffers. A rate cut cycle would bring relief, but it could also prompt more refinancing and early repayments, altering cash-flow timing for investors.
These dynamics highlight the need for disciplined underwriting. Evaluating borrower quality, with a focus on income stability, credit history and repayment capacity, is essential as unemployment rises and consumer sentiment weakens. Strong lending standards, including conservative LTV ratios and sound exit strategies, provide additional protection against potential risks.
Geographic diversification is also critical. Concentrating too heavily in highly competitive, overheated markets like Toronto and Vancouver can compress yields, while spreading investments across smaller cities, suburban areas, and even rural markets—where demand is strong but lender competition is lower—can create opportunities for higher returns and help enhance overall portfolio performance.
Strategies for Navigating Market Shifts
In today’s evolving real estate environment, whole loan investors must approach portfolio construction with greater flexibility. Traditional underwriting practices are no longer sufficient; success depends on combining detailed market intelligence with adaptive underwriting strategies that respond quickly to economic and regulatory changes.
Data-driven due diligence is central to this process. National averages mask the sharp differences between markets such as Toronto and mid-sized or resource-driven regions, where demand is tied more directly to jobs and migration. Tracking housing supply, borrower performance and demographic flows provides a clearer picture of risk and opportunity.
Underwriting criteria must also remain dynamic. Higher interest rates call for more conservative assessments of loan-to-value ratios, shorter amortization periods, and careful evaluation of borrower credit and income stability to safeguard against affordability pressures. In a declining rate environment, the focus shifts toward managing prepayment risk and structuring loans to preserve stable cash flow despite potential early repayments.
Investing through a specialized private mortgage firm like CMI lets investors focus on results, not day-to-day management. Experienced providers handle payments, borrower communications, and risk oversight, while producing the analytics and market insight needed to navigate changing conditions. This approach helps investors optimize performance, maintain stable cash flow, and mitigate downside risk—without the operational burden of managing a whole-loan portfolio themselves.
Conclusion & Key Takeaways
In a market defined by both volatility and opportunity, disciplined underwriting and regional insight are what turn mortgages into portfolios stabilizers and reliable streams.
For private mortgage investors looking to navigate today’s market with confidence, CMI Mortgage Investments delivers more than access to high-quality mortgages. It offers a decade-tested framework for generating consistent, compelling income while protecting capital. What began as a three-person team in 2005 has grown into a national platform with over $3 billion in originations and $1 billion in assets under management. Through it all, CMI’s founder-led approach ensures expertise, continuity, and alignment with investor interests, delivering both scale and stability.
To get started, contact a CMI expert today for a free consultation and explore how the CMI Mortgage Investments program can meet your unique investment objectives.
