Non-traditional mortgage lender Xceed Mortgage Corp. today reported that its second-quarter profit grew by more than 42% as its loans more than doubled.

The Toronto-based company said it made $4.7 million, or 16¢ a share, up from $3.3 million, or 11¢ a share, a year earlier.

Xceed’s mortgage fundings of $281 million in the second quarter were more than double its fundings in the same quarter of 2006.

Xceed said its average mortgage default ratio — loans 90 or more days in arrears — on the company’s portfolio increased to 2.72% in the second quarter, up from 2.23% in the same period last year.

The company pinned the increase primarily on the aging of the portfolio, stating that defaults are less likely to occur in the early stages of a mortgage term.

“It is evident that, as we foretold last year, while more lenders have entered Canada’s non-traditional mortgage market, they have helped to further stimulate the growth in the overall alternative residential market, including the development of new products by ourselves and others,{ said Ivan Wahl, the company’s chairman and CEO, in a news release.

The company also announced a 12.5% increase in its quarterly cash dividend to nine cents per share.

Xceed provides mortgages to customers who might not qualify for loans to traditional lenders, such as banks.