Street Capital
Street Capital was a Canadian residential mortgage lender that originated loans through independent brokers.
- Acquired by RFA
Street Capital was a Canadian residential mortgage lender that originated loans through independent brokers.
Street Capital originated mortgages through a national network of independent mortgage brokers rather than a branch network, which kept distribution costs low and let it compete on rate. It held approved lender status with Canada Mortgage and Housing Corporation, giving it access to insured mortgage funding. The lender administered nearly $28 billion in mortgage loans for about 130,000 customers across every province except Quebec.
Its federal Schedule I bank charter let the lender fund mortgages with insured and broker deposits instead of relying only on securitization. The charter also allowed it to take deposits alongside its mortgage business.
Source: vancouver.citynews.ca
Street Capital's capital position constrained its growth: its leverage ratio fell to 9.2 per cent in the first quarter of 2019 from 12.7 per cent a year earlier, and the federal banking regulator intervened over its capital. The lender also cut roughly 30 jobs in January 2019 as it reduced its cost base.
Its distribution depended almost entirely on independent mortgage brokers, and its lending was concentrated in residential mortgages in every province except Quebec, leaving it exposed to regional housing cycles. The lender's funding relied heavily on securitization, which made its margins sensitive to funding spreads and to the availability of insured mortgage funding.
Source: canadianmortgagetrends.com
Street Capital set mortgage rates to compete in the broker channel, using a wholesale model without a branch network to keep borrower rates competitive. It extended preferred rates to members of partner associations through affinity programs.
The lender's pricing depended on wholesale funding: it securitized pools of insured mortgages and funded loans with insured and broker deposits after receiving its Schedule I bank charter. Its borrowers were prime and near-prime clients who fell outside traditional bank criteria, including self-employed applicants and newcomers to Canada, a segment that prices at wider spreads than insured prime lending.
Source: weissratings.com