June 22, 2022
OTTAWA (ON) – Recently, news articles have referenced Magenta’s decision to restrict loan applications to those with funding dates after September 1st, 2022. We would like to clarify the reasoning behind our strategic business decision.
First of all, we created Magenta to help Ontario families own homes and to provide dependable investment for investors. Magenta underwrites residential mortgages falling just outside of increasingly elevated and rigid institutional underwriting criteria. Utilizing our lending capacity to the fullest is the best way to benefit borrowers and investors alike.
Accordingly, our decision to reduce our lending from the highs achieved in Spring 2022 was a function of our finite capacity.
Furthermore, current market conditions create an opportunity. Yields are rising and mortgage lenders are able to be more stringent in their lending standards. Any development that increases the size and quality of the alternative mortgage market is positive for us. For example, the spike in investor return we achieved in the aftermath of the 2008 financial crisis. Our lending capacity grows daily from an influx of new investment capital.
In conclusion, Magenta will continue to accelerate its lending activities in the months and years to come.
