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Shares of Home Capital Group Inc. plunged 65 per cent Wednesday after the embattled mortgage lender said it was seeking a $2 billion line of credit to backstop a significant decline in deposits at its subsidiary.

Home Trust has seen deposits drop by nearly $600 million in recent weeks and Home Capital said that it expects the withdrawals to accelerate.

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The mortgage lender said that the terms of the proposed credit line — negotiated with “a major institutional investor” — would “have a material impact on earnings, and would leave the Company unable to meet previously announced financial targets.”

Analysts suggested the loan could come with an effective interest rate as high as 22.5 per cent on the first $1 billion.

Home Capital said the non-binding agreement in principle would be secured against a portfolio of mortgages originated by Home Trust.

“Access to these funds is intended to mitigate the impact of a decline in Home Trust’s HISA (high interest savings account) deposit balances that has occurred over the past four weeks and that has accelerated since April 20…. The Company anticipates that further declines will occur, and that the credit line would also mitigate the impact of those,” the company said.