First National Financial LP

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Better is a powerful word. To our industry-leading commercial mortgage team, it means to surpass, to go beyond the ordinary to listen, advise and deliver financing solutions that are better for your business. Better features, better terms, better timing, better service. Better for you in every way.

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Leveraging our CMHC expertise, broad product portfolio, diverse specialists and responsiveness, we’ve blazed trails in financing new rental construction, general construction and burgeoning real estate businesses. 


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Original perspectives and personal viewpoints on developments and industry trends in commercial real estate.

Mid-Range Hedge: How three leading First National clients profited from our newest innovation

  • First National Financial LP

What follows are stories of First National clients whose business needs inspired us to create Mid-Range Hedge, the industry’s first 9-month rate lock program to address interest rate volatility on maturing CMHC insured multi-unit property mortgages, construction take-out loans and funds needed for long-dated purchases. Please speak to your First National advisor if these stories resonate with you and to see if your requirements align with the criteria we use to adjudicate the use of this powerful hedge program.

Hedging in January for a $90 million mortgage renewal in June

In January 2022, the private owner of eight apartment properties in Vancouver noted that his mortgages were scheduled to mature in June. Despite almost two years of generationally low interest rates, he felt that surging inflation was bound to cause the Bank of Canada to raise rates by the time he renewed. Being loyal to his incumbent financial institution, he asked if it would lock in a rate of interest six months in advance? He was told no. When he spoke to First National, the answer was yes.

That same month, First National placed a Mid-Range Hedge through June 2022 on $90 million of mortgage proceeds at an effective interest rate of 2.6% inclusive of hedging costs.  The client took the proceeds as part of a CMHC term loan and noted with satisfaction that Mid-Range Hedge not only allowed him to rest easy knowing exactly what his mortgage payments would be for the full five-year mortgage term but also made a material difference to his interest costs. Had he waited to renew at maturity, the interest rate would have been 4.25%, reflecting three Bank of Canada rate increases between January and June. Of equal importance, the comparatively lower lock-in interest rate allowed the borrower to achieve a higher loan amount on closing because of more favourable debt coverage. Extra proceeds empowered the borrower to more aggressively pursue his business objectives.

Hedging for a $180 million construction take-out mortgage with maximum flexibility

By nature, developing properties comes with significant risk. The most common are the risk of construction material and labour inflation and the risk of construction setbacks and delays in receiving occupancy permits (a requirement for CMHC insured loans) or achieving full lease up (a conventional term loan requirement). Now, the development industry needs to add the prospect of volatile interest rates to their risk assessments – a factor that can materially alter project profitability if proforma assumptions change because of rising rates. As part of a broader risk management strategy, one West Coast developer recently chose a First National conventional construction loan but also opted to apply for and pay the premium on a CMHC construction loan so that it could guarantee itself insured term financing on occupancy – a smart strategy. Unfortunately, the client encountered delays in receiving the building occupancy permit. Fortunately, this client had already arranged a Mid-Range Hedge to guarantee the interest rate on its term takeout loan. As each day passed without the occupancy permit, market rates changed but the interest rate on the client’s $180 million takeout financing did not. In the end, Mid-Range Hedge was extended for four weeks – an unheard-of level of flexibility for any rate-lock program. Then, within one day of the arrival of the occupancy permit, First National converted the construction loan to a CMHC insured mortgage.

Hedging for a $50 million refinancing in tranches

First National clients are sophisticated users of capital that operate with well-defined value creation hurdle rates when making any investment. One of our long-time borrowers recently chose to refinance a $50 million mortgage on a multi-unit building in mid-town Toronto. Sensing an opportunity to take advantage of interest rate volatility, the borrower asked First National if it would be possible to set up a hedge in increments, reasoning that doing so would allow it to watch for mini-bond rallies and lock in the best rates in tranches. The answer was yes. Within days, five Mid-Range Hedges in $10 million increments were established and every two weeks, First National’s treasury department locked in prevailing rates on each tranche. First National then took the weighted average interest rate across all five hedges and applied it to the $50 million CMHC insured mortgage.  The client reckons that timing the market using the tranche approach allowed it to avoid interest rate spikes during the 10-week period before funding.

What’s important to know

  • Mid-Range Hedge is a feature of First National’s financings on insured loans and is available for select transactions of $20 million and above
  • The hedge can last anywhere from 91 days to nine months (or beyond) and is the only product of its kind in Canada to mitigate interest rate volatility for such an extended time
  • Clients can choose an arbitrary funding date and set up a corresponding hedge expiry date but close out the hedge earlier if they wish for maximum flexibility
  • First National can lock the rate once the loan has been committed prior to CMHC approval as long as the commitment fee has been received
  • Mid-Range Hedge can be activated quickly

Mid-Range Hedge: an empowering option

Mid-Range Hedge exists now as a formal product because First National is dedicated to empowering clients with tools that enable them to focus on their fundamentals rather than divert attention to the vagaries of the bond market,” said Evan Pawliuk, Assistant Vice President, Commercial Mortgages. “We took all of the lessons learned over the years in offering hedges case by case and with the assistance of our treasury team, applied them to develop this program.”

Pawliuk, whose clients use First National to mitigate various risks, noted that in his role as an advisor, he does not make calls on interest rates “but I do think the extreme volatility in bond markets and the unprecedented speed of rate hikes put through by the Bank of Canada this year makes Mid-Range Hedge an innovation that’s right for the times. It gives borrowers some control over an important aspect of their input costs.”

Market reaction to the introduction of this proprietary program has been swift. “Our clients really like knowing that Mid-Range Hedge is available to them if they want it. It’s considered an insurance policy that turns business assumptions about interest rate costs and loan amounts into guaranteed outcomes,” said Pawliuk. “Certainty is important and gives our clients the ability to make decisions that are best for their business.”

Mid-Range Hedge: How three leading First National clients profited from our newest innovation

  • First National Financial LP

What follows are stories of First National clients whose business needs inspired us to create Mid-Range Hedge, the industry’s first 9-month rate lock program to address interest rate volatility on maturing CMHC insured multi-unit property mortgages, construction take-out loans and funds needed for long-dated purchases. Please speak to your First National advisor if these stories resonate with you and to see if your requirements align with the criteria we use to adjudicate the use of this powerful hedge program.

Hedging in January for a $90 million mortgage renewal in June

In January 2022, the private owner of eight apartment properties in Vancouver noted that his mortgages were scheduled to mature in June. Despite almost two years of generationally low interest rates, he felt that surging inflation was bound to cause the Bank of Canada to raise rates by the time he renewed. Being loyal to his incumbent financial institution, he asked if it would lock in a rate of interest six months in advance? He was told no. When he spoke to First National, the answer was yes.

That same month, First National placed a Mid-Range Hedge through June 2022 on $90 million of mortgage proceeds at an effective interest rate of 2.6% inclusive of hedging costs.  The client took the proceeds as part of a CMHC term loan and noted with satisfaction that Mid-Range Hedge not only allowed him to rest easy knowing exactly what his mortgage payments would be for the full five-year mortgage term but also made a material difference to his interest costs. Had he waited to renew at maturity, the interest rate would have been 4.25%, reflecting three Bank of Canada rate increases between January and June. Of equal importance, the comparatively lower lock-in interest rate allowed the borrower to achieve a higher loan amount on closing because of more favourable debt coverage. Extra proceeds empowered the borrower to more aggressively pursue his business objectives.

Hedging for a $180 million construction take-out mortgage with maximum flexibility

By nature, developing properties comes with significant risk. The most common are the risk of construction material and labour inflation and the risk of construction setbacks and delays in receiving occupancy permits (a requirement for CMHC insured loans) or achieving full lease up (a conventional term loan requirement). Now, the development industry needs to add the prospect of volatile interest rates to their risk assessments – a factor that can materially alter project profitability if proforma assumptions change because of rising rates. As part of a broader risk management strategy, one West Coast developer recently chose a First National conventional construction loan but also opted to apply for and pay the premium on a CMHC construction loan so that it could guarantee itself insured term financing on occupancy – a smart strategy. Unfortunately, the client encountered delays in receiving the building occupancy permit. Fortunately, this client had already arranged a Mid-Range Hedge to guarantee the interest rate on its term takeout loan. As each day passed without the occupancy permit, market rates changed but the interest rate on the client’s $180 million takeout financing did not. In the end, Mid-Range Hedge was extended for four weeks – an unheard-of level of flexibility for any rate-lock program. Then, within one day of the arrival of the occupancy permit, First National converted the construction loan to a CMHC insured mortgage.

Hedging for a $50 million refinancing in tranches

First National clients are sophisticated users of capital that operate with well-defined value creation hurdle rates when making any investment. One of our long-time borrowers recently chose to refinance a $50 million mortgage on a multi-unit building in mid-town Toronto. Sensing an opportunity to take advantage of interest rate volatility, the borrower asked First National if it would be possible to set up a hedge in increments, reasoning that doing so would allow it to watch for mini-bond rallies and lock in the best rates in tranches. The answer was yes. Within days, five Mid-Range Hedges in $10 million increments were established and every two weeks, First National’s treasury department locked in prevailing rates on each tranche. First National then took the weighted average interest rate across all five hedges and applied it to the $50 million CMHC insured mortgage.  The client reckons that timing the market using the tranche approach allowed it to avoid interest rate spikes during the 10-week period before funding.

What’s important to know

  • Mid-Range Hedge is a feature of First National’s financings on insured loans and is available for select transactions of $20 million and above
  • The hedge can last anywhere from 91 days to nine months (or beyond) and is the only product of its kind in Canada to mitigate interest rate volatility for such an extended time
  • Clients can choose an arbitrary funding date and set up a corresponding hedge expiry date but close out the hedge earlier if they wish for maximum flexibility
  • First National can lock the rate once the loan has been committed prior to CMHC approval as long as the commitment fee has been received
  • Mid-Range Hedge can be activated quickly

Mid-Range Hedge: an empowering option

Mid-Range Hedge exists now as a formal product because First National is dedicated to empowering clients with tools that enable them to focus on their fundamentals rather than divert attention to the vagaries of the bond market,” said Evan Pawliuk, Assistant Vice President, Commercial Mortgages. “We took all of the lessons learned over the years in offering hedges case by case and with the assistance of our treasury team, applied them to develop this program.”

Pawliuk, whose clients use First National to mitigate various risks, noted that in his role as an advisor, he does not make calls on interest rates “but I do think the extreme volatility in bond markets and the unprecedented speed of rate hikes put through by the Bank of Canada this year makes Mid-Range Hedge an innovation that’s right for the times. It gives borrowers some control over an important aspect of their input costs.”

Market reaction to the introduction of this proprietary program has been swift. “Our clients really like knowing that Mid-Range Hedge is available to them if they want it. It’s considered an insurance policy that turns business assumptions about interest rate costs and loan amounts into guaranteed outcomes,” said Pawliuk. “Certainty is important and gives our clients the ability to make decisions that are best for their business.”

Mid-Range Hedge: How three leading First National clients profited from our newest innovation

  • First National Financial LP

What follows are stories of First National clients whose business needs inspired us to create Mid-Range Hedge, the industry’s first 9-month rate lock program to address interest rate volatility on maturing CMHC insured multi-unit property mortgages, construction take-out loans and funds needed for long-dated purchases. Please speak to your First National advisor if these stories resonate with you and to see if your requirements align with the criteria we use to adjudicate the use of this powerful hedge program.

Hedging in January for a $90 million mortgage renewal in June

In January 2022, the private owner of eight apartment properties in Vancouver noted that his mortgages were scheduled to mature in June. Despite almost two years of generationally low interest rates, he felt that surging inflation was bound to cause the Bank of Canada to raise rates by the time he renewed. Being loyal to his incumbent financial institution, he asked if it would lock in a rate of interest six months in advance? He was told no. When he spoke to First National, the answer was yes.

That same month, First National placed a Mid-Range Hedge through June 2022 on $90 million of mortgage proceeds at an effective interest rate of 2.6% inclusive of hedging costs.  The client took the proceeds as part of a CMHC term loan and noted with satisfaction that Mid-Range Hedge not only allowed him to rest easy knowing exactly what his mortgage payments would be for the full five-year mortgage term but also made a material difference to his interest costs. Had he waited to renew at maturity, the interest rate would have been 4.25%, reflecting three Bank of Canada rate increases between January and June. Of equal importance, the comparatively lower lock-in interest rate allowed the borrower to achieve a higher loan amount on closing because of more favourable debt coverage. Extra proceeds empowered the borrower to more aggressively pursue his business objectives.

Hedging for a $180 million construction take-out mortgage with maximum flexibility

By nature, developing properties comes with significant risk. The most common are the risk of construction material and labour inflation and the risk of construction setbacks and delays in receiving occupancy permits (a requirement for CMHC insured loans) or achieving full lease up (a conventional term loan requirement). Now, the development industry needs to add the prospect of volatile interest rates to their risk assessments – a factor that can materially alter project profitability if proforma assumptions change because of rising rates. As part of a broader risk management strategy, one West Coast developer recently chose a First National conventional construction loan but also opted to apply for and pay the premium on a CMHC construction loan so that it could guarantee itself insured term financing on occupancy – a smart strategy. Unfortunately, the client encountered delays in receiving the building occupancy permit. Fortunately, this client had already arranged a Mid-Range Hedge to guarantee the interest rate on its term takeout loan. As each day passed without the occupancy permit, market rates changed but the interest rate on the client’s $180 million takeout financing did not. In the end, Mid-Range Hedge was extended for four weeks – an unheard-of level of flexibility for any rate-lock program. Then, within one day of the arrival of the occupancy permit, First National converted the construction loan to a CMHC insured mortgage.

Hedging for a $50 million refinancing in tranches

First National clients are sophisticated users of capital that operate with well-defined value creation hurdle rates when making any investment. One of our long-time borrowers recently chose to refinance a $50 million mortgage on a multi-unit building in mid-town Toronto. Sensing an opportunity to take advantage of interest rate volatility, the borrower asked First National if it would be possible to set up a hedge in increments, reasoning that doing so would allow it to watch for mini-bond rallies and lock in the best rates in tranches. The answer was yes. Within days, five Mid-Range Hedges in $10 million increments were established and every two weeks, First National’s treasury department locked in prevailing rates on each tranche. First National then took the weighted average interest rate across all five hedges and applied it to the $50 million CMHC insured mortgage.  The client reckons that timing the market using the tranche approach allowed it to avoid interest rate spikes during the 10-week period before funding.

What’s important to know

  • Mid-Range Hedge is a feature of First National’s financings on insured loans and is available for select transactions of $20 million and above
  • The hedge can last anywhere from 91 days to nine months (or beyond) and is the only product of its kind in Canada to mitigate interest rate volatility for such an extended time
  • Clients can choose an arbitrary funding date and set up a corresponding hedge expiry date but close out the hedge earlier if they wish for maximum flexibility
  • First National can lock the rate once the loan has been committed prior to CMHC approval as long as the commitment fee has been received
  • Mid-Range Hedge can be activated quickly

Mid-Range Hedge: an empowering option

Mid-Range Hedge exists now as a formal product because First National is dedicated to empowering clients with tools that enable them to focus on their fundamentals rather than divert attention to the vagaries of the bond market,” said Evan Pawliuk, Assistant Vice President, Commercial Mortgages. “We took all of the lessons learned over the years in offering hedges case by case and with the assistance of our treasury team, applied them to develop this program.”

Pawliuk, whose clients use First National to mitigate various risks, noted that in his role as an advisor, he does not make calls on interest rates “but I do think the extreme volatility in bond markets and the unprecedented speed of rate hikes put through by the Bank of Canada this year makes Mid-Range Hedge an innovation that’s right for the times. It gives borrowers some control over an important aspect of their input costs.”

Market reaction to the introduction of this proprietary program has been swift. “Our clients really like knowing that Mid-Range Hedge is available to them if they want it. It’s considered an insurance policy that turns business assumptions about interest rate costs and loan amounts into guaranteed outcomes,” said Pawliuk. “Certainty is important and gives our clients the ability to make decisions that are best for their business.”

Mid-Range Hedge: How three leading First National clients profited from our newest innovation

  • First National Financial LP

What follows are stories of First National clients whose business needs inspired us to create Mid-Range Hedge, the industry’s first 9-month rate lock program to address interest rate volatility on maturing CMHC insured multi-unit property mortgages, construction take-out loans and funds needed for long-dated purchases. Please speak to your First National advisor if these stories resonate with you and to see if your requirements align with the criteria we use to adjudicate the use of this powerful hedge program.

Hedging in January for a $90 million mortgage renewal in June

In January 2022, the private owner of eight apartment properties in Vancouver noted that his mortgages were scheduled to mature in June. Despite almost two years of generationally low interest rates, he felt that surging inflation was bound to cause the Bank of Canada to raise rates by the time he renewed. Being loyal to his incumbent financial institution, he asked if it would lock in a rate of interest six months in advance? He was told no. When he spoke to First National, the answer was yes.

That same month, First National placed a Mid-Range Hedge through June 2022 on $90 million of mortgage proceeds at an effective interest rate of 2.6% inclusive of hedging costs.  The client took the proceeds as part of a CMHC term loan and noted with satisfaction that Mid-Range Hedge not only allowed him to rest easy knowing exactly what his mortgage payments would be for the full five-year mortgage term but also made a material difference to his interest costs. Had he waited to renew at maturity, the interest rate would have been 4.25%, reflecting three Bank of Canada rate increases between January and June. Of equal importance, the comparatively lower lock-in interest rate allowed the borrower to achieve a higher loan amount on closing because of more favourable debt coverage. Extra proceeds empowered the borrower to more aggressively pursue his business objectives.

Hedging for a $180 million construction take-out mortgage with maximum flexibility

By nature, developing properties comes with significant risk. The most common are the risk of construction material and labour inflation and the risk of construction setbacks and delays in receiving occupancy permits (a requirement for CMHC insured loans) or achieving full lease up (a conventional term loan requirement). Now, the development industry needs to add the prospect of volatile interest rates to their risk assessments – a factor that can materially alter project profitability if proforma assumptions change because of rising rates. As part of a broader risk management strategy, one West Coast developer recently chose a First National conventional construction loan but also opted to apply for and pay the premium on a CMHC construction loan so that it could guarantee itself insured term financing on occupancy – a smart strategy. Unfortunately, the client encountered delays in receiving the building occupancy permit. Fortunately, this client had already arranged a Mid-Range Hedge to guarantee the interest rate on its term takeout loan. As each day passed without the occupancy permit, market rates changed but the interest rate on the client’s $180 million takeout financing did not. In the end, Mid-Range Hedge was extended for four weeks – an unheard-of level of flexibility for any rate-lock program. Then, within one day of the arrival of the occupancy permit, First National converted the construction loan to a CMHC insured mortgage.

Hedging for a $50 million refinancing in tranches

First National clients are sophisticated users of capital that operate with well-defined value creation hurdle rates when making any investment. One of our long-time borrowers recently chose to refinance a $50 million mortgage on a multi-unit building in mid-town Toronto. Sensing an opportunity to take advantage of interest rate volatility, the borrower asked First National if it would be possible to set up a hedge in increments, reasoning that doing so would allow it to watch for mini-bond rallies and lock in the best rates in tranches. The answer was yes. Within days, five Mid-Range Hedges in $10 million increments were established and every two weeks, First National’s treasury department locked in prevailing rates on each tranche. First National then took the weighted average interest rate across all five hedges and applied it to the $50 million CMHC insured mortgage.  The client reckons that timing the market using the tranche approach allowed it to avoid interest rate spikes during the 10-week period before funding.

What’s important to know

  • Mid-Range Hedge is a feature of First National’s financings on insured loans and is available for select transactions of $20 million and above
  • The hedge can last anywhere from 91 days to nine months (or beyond) and is the only product of its kind in Canada to mitigate interest rate volatility for such an extended time
  • Clients can choose an arbitrary funding date and set up a corresponding hedge expiry date but close out the hedge earlier if they wish for maximum flexibility
  • First National can lock the rate once the loan has been committed prior to CMHC approval as long as the commitment fee has been received
  • Mid-Range Hedge can be activated quickly

Mid-Range Hedge: an empowering option

Mid-Range Hedge exists now as a formal product because First National is dedicated to empowering clients with tools that enable them to focus on their fundamentals rather than divert attention to the vagaries of the bond market,” said Evan Pawliuk, Assistant Vice President, Commercial Mortgages. “We took all of the lessons learned over the years in offering hedges case by case and with the assistance of our treasury team, applied them to develop this program.”

Pawliuk, whose clients use First National to mitigate various risks, noted that in his role as an advisor, he does not make calls on interest rates “but I do think the extreme volatility in bond markets and the unprecedented speed of rate hikes put through by the Bank of Canada this year makes Mid-Range Hedge an innovation that’s right for the times. It gives borrowers some control over an important aspect of their input costs.”

Market reaction to the introduction of this proprietary program has been swift. “Our clients really like knowing that Mid-Range Hedge is available to them if they want it. It’s considered an insurance policy that turns business assumptions about interest rate costs and loan amounts into guaranteed outcomes,” said Pawliuk. “Certainty is important and gives our clients the ability to make decisions that are best for their business.”

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