The Canada-US relationship has taken centre stage recently – but could the Canadian mortgage space benefit from importing US ideas?

Canada-US relations have been in the spotlight more than usual in recent weeks, thanks in large part to Donald Trump’s suggestion that the two should become one country and his threats to slap tariffs on all Canadian goods crossing the border into the US. But when it comes to the two countries’ mortgage industries, who has the upper hand – and could either benefit in importing policies from the other?
Among the most obvious differences between the mortgage markets on either side of the border is the comparative lack of government-backed mortgage entities in Canada. While the US features several federal bodies aimed at providing insurance, liquidity, and uniform guidelines – such as government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, as well as the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) – Canada has a single government-backed entity, Canada Mortgage and Housing Corporation (CMHC), which provides mortgage insurance to lenders.
Fannie Mae and Freddie Mac, while technically public-private hybrids, were placed into federal conservatorship during the 2008 global financial crisis and have remained under government control since. Ending this arrangement and privatizing the GSEs is considered one of the housing priorities of the new Trump administration, though significant challenges remain.
That glut of federally backed entities in the US provides a variety of options for homebuyers to secure loans with down payments of 5% or less, such as FHA loans (3.5% down) and VA loans (no down payment for eligible veterans). In contrast, CMHC is Canada’s only government-backed organization to provide lenders with mortgage insurance for a minimum down payment of 5%. While private insurers – Sagen and Canada Guaranty – also offer mortgage insurance in Canada, they are not government-supported.
Justin Trudeau’s resignation as PM brings both political and economic uncertainty. With U.S. tariff threats looming and consumer confidence dipping, mortgage brokers are bracing for the ripple effects on housing and lending.https://t.co/cpPdY6OCaK
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 17, 2025
US has the edge over Canada on secondary mortgage markets
The US surpasses Canada on secondary markets “by a wide margin,” according to Bekim Merdita (pictured top), executive vice president at Rocket Mortgage Canada, who highlighted the ability of US lenders to sell loans into the market and provide nearly instant liquidity on the money they lend.
In Canada, by contrast, “there is very little liquidity available – especially for uninsured loans,” he told Canadian Mortgage Professional, “which basically means that if a consumer is purchasing a home valued at over $1.5 million or taking equity out through a refinance, then the money is coming from a bank – and that mortgage will be held directly by the bank rather than being sold on the backend. This gives all the power to the banks who have the capital, which limits options and competition.”
The development of a robust secondary market in Canada, Merdita argued, would encourage competition and open the playing field for new entrants – something that he said would only be positive for Canadian borrowers.
Could Canada introduce 30-year fixed mortgage rates?
Another significant point of divergence between the US and Canada: the fact that borrowers are required to renew their mortgage every few years north of the border, while in the US a term may remain fixed for the entire duration of the loan – for instance, a 30-year period.
That means the US saw little of the recent alarm witnessed in Canada over a surge of impending mortgage renewals at higher rates in 2025 and 2026. Still, whether one system trumps the other is difficult to say, according to Merdita.
“The Canadian mortgage market is focused on stability and long-term prudence. The US market is focused on homeownership access nearly above all else,” he said. “For that reason, the US market tends to see higher highs and lower lows, whereas Canada’s mortgage market is typically more secure.”
What’s more: Canadians shouldn’t expect to see the introduction of a fixed 30-year mortgage anytime soon. There’s simply no investor (secondary) market for that in Canada, with little hope of a change unless banks relinquish some of their power. “Change would force the Canadian banks to redesign the way they do Interest Rate Differential (IRD) penalties to make them more standardized,” Merdita said.
“That would be a massive advantage for consumers who find themselves stuck in their mortgages – but it would cost the banks dearly.”
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