The news: Rocket Mortgage will leave Canada, citing its parent company’s focus on the US housing market, per The Financial Post.
The landscape: Another motivator for Rocket’s decision could be Canadian banks’ dominance in mortgage funding. Unlike the US where lenders can sell mortgages to government-backed entities (e.g., Fannie Mae and Freddie Mac), Canada’s system primarily benefits large banks. Only a select group of major banks can access low-cost funding through covered bonds, leaving competitors like Rocket at a disadvantage.
And in 2016, the Canadian government ended default insurance for refinances, larger loans, 30-year amortizations, and single-unit rentals, further tightening competition. While this was intended to mitigate risk, several safeguards—such as stricter lending standards, improved anti-fraud technology, and higher capital requirements—already exist.