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Robert Mclister: Canada's mortgage market is tailor -made to protect Big Six banks from most competitions
Published on March 07, 2025 • Last updated 22 hours ago • Read 4 minutes
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One of the most dominant mortgages in the world and the second largest in the United States runs from Canada.
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Rocket Mortgage Canada dropped this bomb on Thursday. In a brief explanation, a spokesman said: “This decision agrees with our parents, rocket companies, with growth on the American housing market – where it has been served by customers for almost 40 years. “
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What the spokesman turns tender was that the main reason was that a well -financed, professionally managed and technologically superior lender Canada left. The answer is in a word “banks”.
It's all about financing
In the United States, most conventional mortgages are sold to Fannie Mae and Freddie Mac. The system, which is immeasurably safer than the ruthless days of the US mortgage melting from 2008, keeps American lenders liquid and stable.
In Canada we also have an offense. The problem is that insurance insurance mainly applies to insured mortgages.
Only one VIP list of eight lending-mainly from our Megabanks-Hat Access to covered bonds that offer cost-effective funds for non-insured Prime mortgages. According to the latest data from the Bank of Canada, 83 percent of all new bank mortgages are triggered.
This means that bankrvals like Rocket have to go into hand to ask banks for financing, for … they guessed the banks.
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What are the chances that banks will give their competitors competitive funds that are in Big Six Bank market share? About almost a snowman survived a summer summer.
The government speaks a big game about the “supportive competition” in the Canadian mortgage market, but in reality it mainly supports the insured competition.
Canada's conventional non-insured market is one of the least fluids in the world for small competitors and results directly from the myopical decision of the government, to end the loss insurance for refinement, larger loans, 30-year amortizations and unit rentals.
Ottawa made this call back in 2016 and bowed to public pressure to protect taxpayers from the risk after the US apartment building in 2008 and rising Canadian real estate prices.
Well, this “risk” like the Boogeyman is – considerably thinking about it, but probably leaves the closet for at least four reasons, it probably never leaves.
- Since 2016, the supervisory authorities have drastically tightened the delivery standards, including the addition of a Bundeshypothek -stress test.
- Underwriting and anti-wife technology have put a long way and would be even better if the Canada Revenue Agency has ever decided to join the 21st century with digital income check, as it has been promising for years.
- The capital requirements for large lenders are higher than before.
- Delay insurers now have more capital than necessary and price insurance premiums in order to compensate for the actual insurance mathematical risk of a mortgage failure.
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Residues prove that Canada's market is safer. Despite a Bubblicious home price before March 2022, rising unemployment and the greatest proportionate increase in interest rates since 1982, only 21 out of 10,000 bank customers are more than 90 days behind their mortgage, 40 percent below the long-term average.
Canada's government has to act now
Back to the rocket. In Canada, mainly because our mortgage market is tailor-made to protect the Big Six banks from most competitions. Countries such as the United States, Great Britain and Australia have well -oiled securitized markets for the securing of mortgages and offer smaller lenders easy access to financial resources that go beyond only deposits. Not here.
And this is not a criticism of our amazingly guided banks. They are the envy of the world and they only do what banks do.
But if Canadians want a real, stable competition, our politicians need a light bulb moment about how Ottawa's political attitude and inactivity thwart him.
The average nationwide bank competitor has advertised a five-year fix festival rate for the average 4.67 percent. Compare this with 4.34 percent at Canadian Imperial Bank of Commerce, all of which are happy to meet or even undermine all of your six large comrades.
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One third of the percentage point costs a Canadian family of $ 7,717 more interest over five years in an average new mortgage amount, which is $ 488,262 on Canada's largest mortgage authorature, the Dominion Lending Center Group.
According to Canada Mortgage and Housing Corp. there are 4.75 million main mortgages in this country. Therefore, the total costs for the Canadians that the government do not support for conventional mortgage competition predominate.
Despite the rocket group of corporate size, punch and robust relationships with the largest banks of Canada, the banks refused to give him competitive, non -insured funds. This is how Rockets collapsed.
All in all, it was not just the lack of financing that had grounded a grounded rocket. In my view, the company was not slim enough and its marketing had a lot of space for improvements. But these are as fixable as a flat tire.
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What is not easy to repair is the medieval moat that our government -contrary government has the banks circle for an eternity.
Robert Mclister is a mortgage strategist, interest analyst and editor of Mortgagelogic.news. You can follow him on X at @robmclister.
Mortgage interest
The prices shown below will be updated until the end of each day and come from the Canadian mortgage survey by Mortgagelogic.news. Postmedia and imaginative. Online Inc., parents of Mortgagelogic.news, are compensated by certain mortgage providers if they click on their links in the charts.
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