First National's Q2 volumes fell 12% as a cooler market and stiffer competition hit new originations
First National Financial Corporation (First National) posted a drop in mortgage originations and quarterly profit in the second quarter of 2026 as softer housing activity and heightened competition weighed on new business across Canada's broker channel.
Total mortgage originations and renewals reached $12.2 billion in the three months ended June 3. That's down 12% from $13.8 billion in the same quarter a year earlier, according to the company's unaudited interim condensed consolidated financial statements.
Single-family residential volume declined 11% to $7.7 billion, while multi-unit residential and commercial mortgage volume fell 12% to $4.5 billion.
First National attributed the pullback in single-family activity to a combination of subdued Canadian housing market conditions and intensified competition in the broker channel.
Net income for the quarter came in at $3.6 million, down from $63.4 million in Q2 2025. The decline reflects approximately $42.5 million in amortization charges and $3.6 million in other costs tied to the company's $2.9-billion privatisation, which closed in October 2025 following its acquisition by Brookfield and Birch Hill Equity Partners.
Renewals provide partial offset
Higher renewal volumes, including mortgages originated during the elevated activity of 2021, partially softened the decline in new business.
Canada's residential mortgage renewal wave dominated industry volumes in 2025, with Canada Mortgage and Housing Corporation's (CMHC) projecting 1.15 million renewals in 2026 alone as pandemic-era mortgages come due at materially higher rates.
Licensed mortgage broker Leah Zlatkin, an expert at LowestRates.ca, has previously noted that many borrowers are still renewing mortgages taken out when rates were considerably lower, and that even a modest rate increase can reshape a household budget quickly.
Revenue declined 9% to $565.2 million, partly reflecting lower placement fees on a weaker volume mix. Placement-fee revenue fell 36% to $51.9 million as new single-family placement activity slowed and renewals — which typically generate lower fees than new originations — comprised a larger share of total volume.
Excluding acquisition-related accounting charges and other items, underlying pre-tax income fell 35% to $50.9 million, with the company pointing to $12.5 million in additional interest costs associated with higher post-acquisition debt, alongside lower placement fees, higher credit-loss provisions, and increased employee costs.
Portfolio growth continues despite volume pressure
Despite the quarterly origination softness, First National's mortgages under administration (MUA) grew to $169.8 billion at June 30, up approximately 6% from $159.9 billion a year earlier.
The single-family portion of the portfolio was little changed at $98.6 billion, while multi-unit residential and commercial mortgages expanded to $71.2 billion from $61.9 billion, reflecting strength in the institutional and securitisation side of the business.
Mortgage servicing income rose 6% year over year to $73.7 million, underpinned by the larger portfolio and growth in First National's third-party underwriting operations. Its securitised mortgage portfolio increased 3% to $47.7 billion.
The company recorded a $2-million provision for credit losses in the quarter. Mortgages more than 90 days in arrears totalled $24.1 million at June 30 — roughly 0.05% of its securitised mortgage portfolio — a figure that suggests limited near-term stress within First National's book despite the broader market headwinds.
The results land against a challenging backdrop for brokers advising purchase clients. The Canadian Real Estate Association (CREA) has revised its 2026 national home sales forecast to 463,336 transactions, a 1.4% decline from 2025, while five-year fixed insured rates have remained above 4%, testing buyer affordability.
First National expects new single-family originations to remain below year-ago levels over the next two quarters, though renewal activity is projected to exceed year-ago levels, providing a continuing partial offset.
The company has also applied to cease being a reporting issuer following the redemption of its preferred shares in March 2026. If approved, it would no longer be subject to continuous public disclosure requirements under Canadian securities law, although it would continue to provide annual and interim financial statements to holders of its privately placed senior notes.
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