First National Financial LP

A Q3 progress report from Jeremy Wedgbury

  • Jeremy Wedgbury, Senior Vice President, Commercial Mortgages

First National reported its third quarter and year to date results on Tuesday and I must say we are pleased to be more than holding our own in a market that is cooling due to higher interest rates.

Thanks to demand across Canada and our always open-for-business approach, our multi-unit and commercial mortgage originations through the first nine months amounted to $7.4 billion, up 10% from last year at this time. Strong growth pushed our total commercial mortgage book to a record $41.7 billion. This was achieved despite lower activity in the third quarter.

We do not put a lot of stock in a single quarter of performance, but it is evident from Q3 volumes –$2.5 billion versus $2.9 billion last year – that markets are beginning to revert to pre-pandemic levels as Bank of Canada-induced increases in interest rates take a bite out of activity. The shift in demand in the most recent quarter favoured our insured mortgage products.

Pivoting with MLI Select to address more challenging markets

Unlike balance sheet lenders, a key advantage of our non-bank approach is the ability to provide you with access to the market’s broadest range of insured and conventional mortgage products. We think choice is good, particularly when bolstered by our advisory services that are dedicated to securing financing that meets your smart risk objectives. In this environment, I think the combination is more relevant than ever as market dynamics shift.

In this regard, I will draw your attention to MLI Select. As Canada’s largest apartment lender, First National identified this incentive-laden program as an important complement to our insured financing product portfolio when it was introduced by CMHC in March and since, we have become a thought leader in its application.

With rising interest rates and inflation threatening development projects, particularly in Canada’s largest centres, MLI Select can be used to meaningfully offset some of these cost pressures. Having now successfully used MLI Select in our strategies to fund 100 client projects in the past six months – with total MLI Select commitments to construction and term financing outstanding amounting to $1 billion including committed construction loans – we know:

  1. how the scoring systems for energy efficiency, accessibility and affordability work 
  2. how to align funding applications to achieve the most points and therefore incentives 
  3. the program will be essential to the vitality of the multi-unit residential housing industry in 2023

I encourage you to speak to your First National advisor about why we are bullish on MLI Select and how to use it as the pivot point in your financing strategies during this challenging economic period. I would also remind you that programs like this can change at any time, so please speak to us proactively.
Looking ahead

We expect a solid fourth quarter for originations and unsurprisingly, a slowdown ahead as the market digests changing property valuations. Even so, you can rest assured that we will continue offering the industry’s broadest range of mortgage products along with empowering, informative advice. In this regard, one of the developments I am most proud of is growth in our team. 

We have long believed in the importance of a local presence, and we’ve bolstered that through the recruitment of experienced advisors. In our view, there is no such thing as a national real estate market and boots on the ground allow us to better understand and appreciate local trends that drive activity levels, costs, rental rates and ultimately purchase, sale and development opportunities.

In this more challenging environment where some of our competition will retrench and tighten, First National is open for business – as we always have been during bad and good times alike. Please call on us at any time and expect us to reach out to you to provide market updates. 

We look forward to staying close to you in the months ahead.