Mortgage Investment Funds were created by the Canadian government in 1973 as part of the Residential Mortgage Financing Act to address what was believed to be an imminent housing crisis due to a lack of financing for home ownership and construction. These entities pool funds from investors to finance the purchase and construction of Canadian real estate.
Typically charging higher rates than conventional lenders, the earnings are redistributed back to the investors. But the investors that were candidates to participate back then were likely not attracted to the returns as term deposits at that time already had solid yields.
Lower interest rates have negatively impacted the income investors can earn through GICs and other fixed income products. With the uncertainty and volatility of the stock market, many investors are jittery there, too. Thus, to some people it comes as no surprise that in the past decade, Mortgage Investment Funds surged in popularity. What exactly are these investment entities, and what is drawing so many investors to participate in these opportunities? Click to read full article.