In keeping with our role as an S&P/TSX listed reporting issuer, First National published its annual financial results earlier this week. In my capacity as Senior Vice President, Commercial Mortgages, I’m pleased to share the highlights with you as a valued client.
In 2021, our commercial mortgage book surpassed $39 billion, a new record, and up 11% from the previous record set in 2020. This was driven by a record $9.7 billion of commercial mortgage originations, up 7% or $635 million from 2020 and renewals of $2.7 billion, up 42% from 2020. Momentum also continued in the fourth quarter with originations amounting to $3.0 billion, up 12% year over year and mortgage renewals higher by 62%.
Context is important in reviewing performance. At the outset of the pandemic in 2020, massive amounts of liquidity entered the market and our mortgage production rose rapidly. For that reason, I thought it would be difficult to exceed the records set in 2020 because volumes were so high and some of our competitors stayed on the sidelines, ceding market share to us.
But I’m pleased to say I was wrong. One reason is the breadth of First National’s product offerings, which now include our Core Conventional loan program introduced at the beginning of last year. It has proven to be an enormously popular complement to our insured lending products because of its highly competitive lifeco-level interest rates and attractive amortization periods.
People progress
By the numbers, one of the year’s most important highlights was growth in our workforce. Our Commercial team now numbers 200, which gives us a human capital advantage we are intent on leveraging for your benefit. In a business like ours that is fueled by knowledge and unique financing and servicing skills, ongoing people progress is vital which is why we continue to recruit as well as develop our skillsets. On that note, First National has a natural advantage because as the largest and most creative commercial lender in Canada, our team gets a front-row seat to see every conceivable product available in the market.
For First National as a whole, inclusive of our single-family operations, our workforce grew 30% to 1,579, our total mortgage book reached $123.9 billion and we were solidly profitable.
In keeping with public health guidelines, our team is excited to finally see our offices reopening beginning March 7th after almost two years. We will employ a hybrid work-from-home and work-from-office approach, which we think will be a great model for us going forward.
Looking forward: The drivers of action in 2022
As I write, two developments are emerging as key market drivers.
The first is the March 7 launch of CMHC’s new MLI Select program for multi-family housing. First National has already developed several dozen client applications for this exciting program with client interest growing daily. The reason I describe MLI Select as exciting is because it incorporates meaningful incentives for affordable housing creation/preservation, energy efficiency and accessibility in one program and uses a transparent scoring system that provides optionality on which of the three areas to focus on. If you have not yet had a briefing on MLI Select, I recommend you ask your First National advisor about MLI Select’s features and advantages including up to 50-year amortizations and heavily discounted insurance premiums.
The second development is interest rates. The Bank of Canada has put the country in a rising rate cycle as it winds down the extraordinary monetary support it provided the Canadian economy over the past two years and pivots to fight inflation. As such, we are seeing a resurgence in demand for First National’s Early Rate Lock program, even among those who typically borrow from other lenders.
While it is not applicable in every case, Early Rate Lock is worth investigating with your First National advisor because it is market leading and can be used on a specific portion or an entire loan amount.
More generally, we are encouraging clients to strategize with us on the implications of higher rates on their budgets and ROI objectives. Stress testing using projected rates is an important exercise right now, especially in light of the presence of material and labour-cost inflation.
Progress where it counts
I’m proud of the progress made at First National last year, but really the only progress that counts to me and to all of my colleagues is yours.
To be better for you, we have embarked on what we call our Empowered 360 initiative. In simple terms, it encourages our entire Commercial operation – from originators, underwriters and credit adjudicators to funders, servicing administrators and renewal specialists – to actively seek out ways to collaborate to create a superior experience for you.
If we can do anything to help in 2022, please contact your First National advisor. In the meantime, and along with my colleagues Michael C. Williams in Québec and Atlantic Canada and Michael Yeung in Western Canada, I will keep you posted of further progress and changes in our markets and in our operations.
Yours sincerely,
Jeremy Wedgbury
Senior Vice President, Commercial Mortgages