Mortgage Wars Looming as Some Canadians Take Advantage of Lower Rates

The heads of Canada’s top banks expect many mortgage holders to be able to renew at lower rates over the next two years as the lenders compete for a larger share of the market.

Royal Bank of Canada Sees Opportunity in Renewals

Royal Bank of Canada chief executive Dave McKay said 60 per cent of the bank’s customers will renew at lower rates in 2025. Of those who will renew at higher rates, he said 80 per cent will meet the requirements of the industry’s mortgage payment stress test, which essentially means they can manage to make higher payments.

"We’ve had a period where we’ve been on defense for two years, absorbing HSBC," McKay said. "We’ve now absorbed HSBC. We are going on offense with a significantly expanded sales force, which we haven’t had before, and therefore, we’re super excited about the opportunity."

Toronto-Dominion Bank’s Raymond Chun Expects Renewals to Shift to Lower Rates

Toronto-Dominion Bank’s chief operating officer Raymond Chun said about a third of the mortgages coming up for renewal in 2025 and 2026 were also renewed in the past few years. "People had their mortgage renewed, and now they’re looking at their options," he said.

Chun said TD has made several investments to boost its mortgage operations, including bringing in mortgage specialists at its branches across the country. "I look forward to an active season," he said. "Our goal is to make sure that we are growing profitably and continue to take market share as we go forward."

Canadian Imperial Bank of Commerce Expects High Renewal Rate

Canadian Imperial Bank of Commerce chief executive Victor DeGiglio said his bank expects to renew about 200,000-plus mortgages in each of the next three years and is confident of a high renewal rate.

"We live in a very competitive market, the premier league of banking, as I see it," he said. "But we know that we can hold our own. Our goal is to grow more or less with the market."

TD’s Fines and Restrictions May Lead to Aggressive Competition

Some analysts say the restrictions imposed on TD’s growth in the United States could make the landscape even more competitive because the bank may look to aggressively compete at home to meet its financial needs.

"TD has been fined, and there are caps on its expansion," said one analyst. "They need to grow at home, so they’ll be more aggressive in competing for market share."

RBC Analysts Predict a Mortgage War

About 55 per cent of all mortgages with Canadian banks are expected to be renewed in the next two fiscal years and 85 per cent in the next three fiscal years.

"These factors could lead to a mortgage war," RBC analysts said in a note in November, "as Canadians hunt for lower rates and banks look to improve their existing market share."

Banks Invest in Digital Processes

CIBC has invested in digital processes such as mobile mortgage advisers. The bank also has a process in place to reach out to its clients five months before renewal.

"We know that we can hold our own," DeGiglio said. "Our goal is to grow more or less with the market."

Canadian Banks Compete for Market Share

The Canadian banks are competing for market share, and it’s expected to be a busy year for mortgage renewals.

"With so many mortgages up for renewal, we’re expecting a competitive landscape," McKay said. "We’ll compete hard for that."

Chun added: "I look forward to an active season. Our goal is to make sure that we are growing profitably and continue to take market share as we go forward."

Mortgage Rates Expected to Drift Lower

Will mortgage rates keep drifting lower? Some experts predict that they will.

"The best mortgage rates in Canada right now," one expert said, "are the ones that can be found with a bank or credit union. They’re often lower than those offered by big banks."

The Canadian banks are preparing for a competitive landscape as many mortgages come up for renewal over the next two years.

"We expect to see a high renewal rate," DeGiglio said. "We know that we can hold our own. Our goal is to grow more or less with the market."