- Focus remains on first mortgages on single-family units. As of September 2025, 47% of mortgages were in B.C., and 44% in ON. First mortgages accounted for 93% of the portfolio.
- Since June 2024, the Bank of Canada has cut rates eight times (totaling 250 bps), bringing the policy rate to 2.50%. Despite an uptick in inflation last month, we believe one more cut is possible over the next six months amid slowing GDP growth, elevated trade tensions, and high unemployment. While delinquencies remain a concern, easing monetary policy should help mitigate risks.
- At the end of Q3-2025, the MIC had $6M (2.48% of the portfolio vs the sector average of 5.98%) in stage three (impaired) mortgages vs $4M (1.85% of the portfolio) at the end of 2024.
- While impaired mortgages increased, we believe the fund remains well-positioned with a conservative LTV of 56%.
- Outlook: We project yields of 8.70% in 2025, and 8.01% in 2026.
* Three Point Capital has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise specified.
The table below compares Three Point’s portfolio with other MICs (AUM $100M+) focused on already-built single-family residential units.
Three Point has higher first mortgages, and a lower LTV
Significantly fewer stage three/impaired mortgages
The yield is marginally lower, consistent with a lower-risk profile
In its latest Brokers on Lenders survey, the Canadian Mortgage Professional Association asked mortgage brokers nationwide to rank top lenders across 10 categories. In 2025, Three Point earned Gold in all 10 MIC categories, underscoring its strong broker relationships.
Portfolio Details (YE – Dec 31st)
Gross mortgage receivables fell 2% YoY to $199M in 2024, on softer originations, but rose 23% YTD to $244M in 2025 (9M) on stronger activity
Debt to capital increased 9 pp YTD to 28% vs peer range of 20%–40%
Mortgages advanced were up 50% YoY in 2025 (9M); repayments were up 13% YoY
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Exposure to first mortgages remained within the historic range of 90%-95%
Focus remains on already-built single family residential properties
Lending rates declined sharply due to lower market rates, and higher first mortgages
LTV rose 1.9 pp YTD to 56%, slightly above the historical average of 55%
Lowered exposure to B.C., while raising exposure to ON, implying enhanced geographical diversification
The average mortgage size was up 5% YTD
Stage three (impaired) mortgages increased 65% YTD to 2.48% of mortgages vs the sector average of 5.98%
Loan loss allowances were raised by 35% YTD to 0.6% of the portfolio
* red (green) indicates an increase (decrease) in risk level
Overall, we believe the portfolio’s risk profile remains stable, with three green and three red signals
Financials
2024 revenue rose 23% YoY to $22.83M, driven by higher lending rates, nearly matching our estimate of $22.85M
Net income increased 37% YoY, beating our estimate by 2%
2025 (9M) net income rose 10% YoY, despite lower lending rates, supported by higher mortgage receivables
Source: Company / FRC
Note that the above figures may be slightly different from the figures reported by Three Point due to the difference in the method of calculation. We used the average of the opening balance, and year-end balance of the mortgages outstanding, and invested capital, to arrive at the above figures.
2024 yield was 9.68% (vs our estimate of 9.27%) vs 8.13% in 2023
2025 (9M) yield was 9.00%
FRC Projections and Rating
With rates expected to trend downward, we foresee yields declining in 2026
Source: FRC
Our estimate for the 2026 yield varies between 7.65% and 8.23%, as loan loss provisions and lending rates vary
We are reiterating our overall rating of 2, and risk rating of 2.
Given the Bank of Canada’s rate cuts, yields are expected to decline. However, we believe the risk of higher default rates is easing, and the mortgage origination market is likely to gain momentum in 2026. Three Point continues to demonstrate strong operational performance, supported by its high exposure to first mortgages, conservative LTV, and a lower proportion of stage three (impaired) loans relative to industry standards. Overall, we believe Three Point is well-positioned to navigate current macroeconomic challenges and continue delivering relatively stable returns to investors.
Risks
- Loans are short term and must be sourced and replaced quickly.
- Timely capital deployment is critical.
- Declining housing prices could lead to higher LTVs.
- Shareholders’ principal is not guaranteed; NAV per share may decline due to loan losses.
- While the MIC primarily invests in first mortgages, it may hold higher-risk second mortgages.
- The MIC employs leverage, which increases exposure to adverse events.
- Annual redemptions may be capped at 10% of total invested capital.
- Default rates may rise during a recession.
APPENDIX
