A surge in mergers and acquisitions is reshaping the mortgage industry. That’s what drives it
While mortgage activity may be down this year, a series of behind-the-scenes deals suggest the industry is far from stagnant.
The year kicked off with the merger of Fairstone Bank and Home Trust, bringing the brands Oaken Financial, Home Bank, Fairstone, EdenPark and Fig under one roof.
Most recently, Nesto Group partnered with alternative mortgage provider Maple Financial through its CMLS subsidiary. Around the same time, Fisgard Asset Management was acquired by Neighborhood Holdings, a BC-based alternative lender.
Experts may not agree on a single reason behind the surge in M&A activity, but they point to a variety of factors driving it. Most said there could be more to come that would have a real impact on brokers and borrowers.
Cost-effective financing requires scale
One factor behind the latest wave of mergers and acquisitions is growing regulatory complexity, which some say is making it harder for smaller lenders to compete, especially in a cooling but crowded mortgage market.
“I think this is a sign of some macro trends,” said Neighborhood Holdings CEO Taylor Little. “Two issues that stand out are that the regulatory environment in Canada makes it very difficult to compete without scale, and secondly in a slowing real estate market, competition for deals is very fierce, so you need to have sufficient capital to compete.”
Little explained that a decade ago, most lenders with capital could find borrowers. But with Canadians reluctant to make big purchases, only those businesses with access to significant institutional capital will remain competitive.
Smaller lenders often rely on individual private investors to raise capital, while larger lenders have access to cheaper funding through the National Housing Act’s Residential Mortgage-Backed Security (RMBS) program.
Earlier this year, CMHC tightened rules for the NHA RMBS program, making this popular financing tool more restrictive while housing prices push more borrowers into alternative lending.
Blake Dumelie, senior vice president of capital markets at Nesto, explained: “With the reduction in eligibility for CMHC NHA-RMBS issuance over the past few years, and increased competition in home prices, we have seen a significant increase in the alternative mortgage space.”
He added that big banks are not interested in using RMBS to back their mortgage products because they can make better profits by leveraging deposits and other internal sources to fund mortgages. On the other hand, alternative lenders with sufficient scale to enter the RMBS market can gain a foothold in the competition by accessing these low-cost funds.
“We anticipate that if anyone in this space has access to RMBS, they will have an advantage,” Dumelie explained. “When you go from a mom-and-pop shop financing these riskier mortgages with other people’s money to institutional scale and securitization, you need more guardrails than before.”
Compliance as a growing cost of entry
Leveraging institutional capital requires strict regulatory compliance, and operating in the alternative lending space often comes with its own set of requirements – creating significant challenges for smaller players.
“The cost of doing business in Canada is getting higher and higher; the regulatory environment is getting more difficult,” explains Rafer Strandlund, CEO of recently acquired Fisgard.
He explained that prior to the recent acquisition, Fisgard provided loans in five provinces and each of its underwriters had to renew their licenses for each province each year, with some of those underwriters requiring annual training.
“Compliance is becoming a full-time department in any company, so if you’re smaller, it becomes more difficult to put together a competent compliance department,” explains Strandlund. “If you’re small, you’re stuck, and at some point you either have to find a partner to grow or find a way to relax.”
As Strandlund and his sister, Hali Noble, considered their options after the death of their father, Fisgard founder Wayne Strandlund, in 2023, he said an acquisition felt like the best way to secure the company’s future in a more competitive environment.
“When we looked at our options, we said, ‘Well, if this is going to happen in the industry, wouldn’t it be better to get out the door early with quality partners rather than watching great companies come together and then find yourself in the position of being an outsider?'”
If everyone else did it…
Strandlund’s views reflect a necessity that appears to be driving the momentum behind the M&A trend. While it may not have sparked the initial wave, once consolidation began, every deal seemed to add fuel to the fire.
Daniel Webster, president of Maple Financial, believes the company’s recent partnership with Nesto Group through its CMLS subsidiary has accelerated this trend, partly due to the industry profile of his father, John Webster, the former head of the Scottish Mortgage Authority.
“John’s getting a lot of attention, and my point is, they see us and they’re all thinking about how to beat the competition because we’ve expanded so fast in the last five months,” he told us Canadian Mortgage Trendssuggesting that other players in the alternative lending space will not be able to reach this scale without consolidation.
“We have a unique product shelf that is now being copied across the industry and we are very flattered by that because that tells me we are the market leader, so I look forward to more copycats,” he added.
Andrew Gilmour, senior vice president of residential at CMLS, said part of the reason the Maple and CMLS partnership is so feared by competitors is that it gives the combined lender a national presence, broadening the scope of competitors in every market.
“A lot of these institutions are super-regional and they’re never going to scale up [organically],” he said. “None of these institutions have the ability to scale up and bring products to market, and they are completely dependent on a smaller funding base. This naturally limits their capabilities. “
What this means for brokers
Those involved in the deal often point to the potential for new products and services from the integration, but TMG’s Ryan Sims is skeptical.
“Reduced competition rarely means a good thing for brokers and/or borrowers,” he said. “That’s always been a concern of mine; when there are fewer options and fewer players, supply and demand dictates that prices generally go up.”
Sims, for one, expects some of the less profitable product lines to disappear, especially what he calls “marginal lenders” who may be less willing to lend to rural properties.
“I hope it will lead to more selection, more products, deeper benches and deeper product offerings, but I’m skeptical,” he said.
At the same time, Sims believes the consolidation wave has not yet reached its peak and we may see more blockbuster deals in the coming months.
“It’s forced competition because if you don’t scale up and you don’t become more efficient, you may not be as competitive in the next few years,” he said. “I still think there may be a couple of deals that appear unlikely to work together over the next six months.”
Visited 1 times, visited 1 time today
CMHC CMLS Financial Fairstone Bank Fisgard Asset Management Maple Financial M&A Mortgage Industry Neighborhood Holdings Nestor NHA MBS Oaken Financial Residential Mortgage-Backed Securities RMB Taylor Little
Last modified: November 20, 2025
