Competition among lenders in Canada’s mortgage market is expected to escalate as more than half of all bank-held mortgages are set to renew within the next two years. With interest rates easing from their recent peaks, homeowners with expiring fixed-rate terms are likely to shop around for the best deals, creating a highly competitive environment. This surge in activity presents opportunities for borrowers to secure better rates but also intensifies the battle among lenders for market share.
Renewals Drive Intense Competition
According to RBC analyst Darko Mihelic, the high volume of mortgage renewals expected over the next two years is prompting lenders to compete aggressively for business. Homeowners who locked in historically low rates during 2020 are now faced with higher rates at renewal. However, even small rate reductions could yield significant savings. Mihelic estimates that a 50-basis-point difference in renewal rates could save homeowners about $1,000 annually on a typical mortgage.
This dynamic is encouraging mortgage brokers and lenders alike to proactively reach out to clients with renewal offers. Major banks, like TD Bank, are also sharpening their focus on Canadian mortgage renewals, particularly as other growth avenues, such as U.S. expansion, face challenges. As a result, lenders are vying for market share by offering competitive rates and enhanced terms.
Challenges for Mortgage Brokers
While this competitive environment may benefit borrowers, it presents challenges for mortgage brokers. Big banks are leveraging aggressive pricing strategies to capture market share, making it harder for brokers to match or beat their offers. John Webster, former CEO of Scotia Mortgage Authority, referred to some of these strategies as “silly business,” driven by quarterly revenue targets rather than long-term sustainability.
Webster also noted that external factors, such as TD’s struggles in the U.S. and CIBC’s efforts to gain market share, have contributed to this surge in competitive pricing. However, he cautioned that the aggressive pricing trend may not last, predicting a return to more rational pricing strategies in the near future.
What This Means for Borrowers
For homeowners with upcoming mortgage renewals, this competitive market is an opportunity to secure better terms. By shopping around and leveraging the services of a knowledgeable mortgage broker, borrowers can navigate the intense competition to find the best rates and conditions. Brokers can provide insights into lender strategies, help borrowers compare offers, and ensure they capitalize on the savings available in this highly dynamic environment.
If you’re approaching your mortgage renewal, now is the time to act. Contact Connie Hewitt – Your Local Mortgage Expert, for personalized guidance and access to the best mortgage solutions tailored to your needs. In a market where every basis point counts, Connie’s expertise can help you secure the best deal and achieve financial peace of mind.
