Monday Market Minute | Jul 22, 2019

MIC sector steady at mid-year — Romspen and peers maintain distributions

What Moved

Canadian mortgage investment corporations reported solid mid-year results, with major players including Romspen Mortgage Investment Fund maintaining their distribution rates. Aggregate MIC assets under management continued to grow, estimated at over $15 billion nationally. Delinquency rates remained below historical averages despite the housing market volatility of late 2018 and early 2019. The sector's conservative loan-to-value ratios — typically 65-75% on first mortgages — provided an adequate buffer.

Why It Matters

The MIC sector's stability through a period of housing price declines, rate hikes, and economic uncertainty validated the asset class for private markets investors. Unlike equity-based real estate strategies that suffered mark-to-market losses during the housing correction, MIC investors collecting monthly interest distributions experienced minimal disruption. The combination of first-mortgage security, short durations, and active collateral management proved its worth.

Signal to Watch

Construction lending exposure within MIC portfolios deserved closer scrutiny. With housing starts declining in several markets, MICs with outsized construction loan books faced longer completion timelines and potential cost overruns — risks that required active monitoring even in an otherwise stable sector.

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