Mortgage consumers in Canada face a lack of transparency and choice. "Information can be hard to get, and the process is cumbersome. It just doesn't need to be this way. The mortgage market should be able to provide transparent product selection to borrowers, and we aim to do that," according to Frank Fintech Inc. founder and Chief Executive Officer Don Scott.
"If you want to buy a car, you can go to these auto malls here in the north of Toronto, and there are eight dealers all on the same street," Scott told Streetwise Reports. "If you want to buy a house, a realtor will take you into the neighborhood you like and show you 12 homes," but when it comes to choosing a mortgage, consumers are "often shown only one option."
"It's the biggest financial commitment most Canadians will ever make. And they get no choice. There's no transparency," he said.
There are many differences between the Canadian and U.S. mortgage systems, but according to Scott, one of the key differences is the country is "five years behind" the U.S. and other countries in implementing technology in the mortgage space.
"We're looking to be a leader and innovator in that implementation of technology for the benefit of the consumer," Scott said.
First off, the company is not a mortgage lender, and Scott said it does not want to be. It sees itself as a gateway to seeing the best rates and deals available to consumers at any given time and then guiding them through the process with less pain and suffering. Think Jerry AI for mortgages instead of car insurance policies.
Frank wants to streamline the experience, as well. Unlike the fractured process many Canadian consumers face now when you "get your mortgage with us, information is easier to find, and document collection is simplified," Scott said. "It's all just one seamless digital environment where you can get your mortgage completed."
Canada and US Mortgages: Apples and Oranges
There are major differences between Canadian and U.S. mortgages, one key is the length of the term.
"In the U.S. your mortgage term spans the length of the amortization period," BMO Private Wealth explains. "So, at the end of the term, the mortgage will have been paid in full. Canadian mortgages also have an amortization period, which determines the total length of your mortgage, but the mortgage will most likely have a number of shorter mortgage terms within the amortization period. Mortgage terms establish the interest rate and mortgage conditions for a set period of time and are re-negotiated throughout the amortization period in Canada."
Lending rates are influenced by a central bank, in this case, the Bank of Canada (BoC). Even before U.S. President Donald Trump hit Canada with 25% tariffs over the weekend, the BoC trimmed its basis points to 3%, "cut growth forecasts, and said it was concerned that U.S. tariffs could stoke persistently high inflation," according to a report by Promit Mukherjee and David Ljunggren for Reuters.
"A long-lasting and broad-based trade conflict would badly hurt economic activity in Canada," said Bank of Canada Governor Tiff Macklem, according to the report.
"Wednesday's cut marked the sixth time in a row that the bank has reduced borrowing costs," Mukherjee and Ljunggren wrote. "Inflation has consistently stayed around the mid-point of the bank's 1-3% target range, but economic growth is still sluggish."
According to a report on Monday by Fergal McAlinden for Canadian Mortgage Professional, the effect of the tariffs on the housing market "remains to be seen."
"Last week, Bank of Montreal (BMO) chief economist Doug Porter (pictured top) told Canadian Mortgage Professional that the Bank of Canada would likely slash interest rates further if U.S. tariffs began to weigh down heavily on the Canadian economy, meaning potential borrowing costs could end up even lower than first anticipated for the year ahead," he wrote. "But the severity of Trump's measures — and Canada's response, which included retaliatory tariffs on billions of dollars' worth of American goods — leaves plenty in doubt about whether the housing market will suffer from wider economic strain."
Rates to Affect Thousands of Borrowers
That interest rate decision will affect thousands of Canadians. According to a national report, overall mortgage debt increased in Canada to CA$2.2 trillion in July 2024.
"Renewal risk remains as 1.2 million mortgages will come up for renewal in 2025," the report also said. "Most of these will experience higher interest rates than when their term began: 85% of those were contracted when the Bank of Canada rate was at or below 1%."
Scott said his company is trying to make mortgages — and exposure to the range of rates available at any given time — more accessible to Canadian homebuyers. This includes making the process of getting a mortgage easier.
Consumers using normal brokers "don't see the full extent of what's available to them; they only see one option, maybe two," he said. "You never know who has the best rate on any given day. And if you're a rate shopper, you need to talk to someone like us who is open and transparent."
The primary target audience includes new homebuyers, Gen Zers, millennials, and even some late Gen Xers that are first-time homebuyers, the company said. But because they don't offer 30-year mortgages, "renewal business is huge," as well.
According to Siekierska reporting for Yahoo! Finance, there are around 40% of mortgages that are up for renewal going into 2025. While concerns about the impact of the renewal price shock have faded in the wake of the Bank of Canada's loosening cycle, many Canadians will be under financial pressure as they renew at higher rates.
"The good news for those getting ready to renew their mortgage is that there will be competition among banks and lenders to retain and attract customers, which could lead to better deals for consumers," Victor Tran, a Toronto-based mortgage broker, and Ratesdotca mortgage and real estate expert told Siekierska.
Right on Your Cell Phone
And that's where Frank Mortgage comes into play. Consumers can see the available rates "right on their screen, right on their cell phone, which is what all the new digital homebuyers of the future want," Scott said. "They can see information that they need to know to be able to make a good mortgage decision, readily available, (and) easy to access."
It will also "show them a marketplace of rates so they understand that there are dozens of lenders that want their business, not just the one that the typical broker will show them," he said.
Under the status quo, most of the country's residential mortgages are at big banks like RBC, Scotiabank, TD, CIBC, BMO, and Desjardins, according to Wowa Leads.
Scott said Frank Mortgage plans to building partnerships with other firms involved in the real estate and financial markets. He said the company has some existing realtor partners and is "bringing on some very significant additions to those partnerships in 2025, which will grow our volume in multiples."
Frank Mortgage is a private company. Scott said it recently completed a capital raise of CA$1.5 million to help raise awareness of the brand.
"We're going to be smart about it," Scott said. "We're not going to do a lot of just random digital marketing. We're going to do partnership marketing for the most part, and we will do some alternative types of brand-building exercises."
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Important Disclosures:
- Frank Fintech Inc. has a consulting relationship with Street Smart an affiliate of Streetwise Reports. Street Smart Clients pay a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Frank Fintech Inc.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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