Brokers say leading banks are taking a hyper-competitive approach to the 2025 mortgage renewal wave
Much has been made of a possible jump in homebuying activity across Canada this year as interest rates continue to fall – but the renewal market is still expected to be the subject of intense focus in 2025 as banks compete furiously to snag new business and retain existing clients.
Plenty of the borrowers renewing this year, and in 2026, hold five-year fixed-rate mortgages, meaning they’re likely to see a jump in payments when they agree on a new contract.
Still, the recent decision by the federal government to scrap the stress test for uninsured mortgage borrowers who wish to switch lenders at renewal has boosted choice in the market and sparked a tug-of-war among banks to secure those clients, according to a Toronto-based broker.
“With the slightly more flexible lending guidelines, it’s going to be a little bit easier for people to transfer out to another lender,” Victor Tran (pictured, top left) of TMG The Mortgage Group told Canadian Mortgage Professional. “So it’s really important to take the time to do the research and shop around.
“The rate landscape is going to be pretty interesting: lenders, specifically the chartered banks, have been very competitive, basically undercutting each other just to win the business. And we’ll continue to see that going forward.”
While that’s put a renewed emphasis on the lowest rates offered by Canada’s leading lenders, Tran said it’s also likely to see the top banks roll out cashback offers and other perks as competition heats up in the market.
How should borrowers approach mortgage renewal in 2025?
Previously, the need to stress test when switching may have persuaded uninsured borrowers it was in their best interest to stick with their existing lender, putting the ball firmly in banks’ courts – but the new reality means brokers should make sure to keep homeowners fully apprised of the need to explore all their options before committing to a new deal, according to Tran.
49% of Canadians face inflation and cost-of-living concerns in 2025, with mortgage renewals at higher rates. Broker Anthony Zhang stresses communication with lenders to explore options like payment deferrals. https://t.co/2aVVJ0puK6
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 24, 2025
“I think it’s going to be very interesting for anyone coming up for a mortgage renewal, and more important than ever for a homeowner coming up for renewal to really shop around and start early,” he said. “Most people don’t start early enough to really understand what the options are out there.”
The hypercompetitive approach of banks means broker Taz Zhaide (pictured, top right) of 6ix Mortgage Group is urging caution for brokers as they set their strategy for the year ahead.
Renewal business will increase this year – but brokers should keep their expectations realistic, he told CMP, and acknowledge that many borrowers will still decide to stay with their bank at renewal despite the new rules.
“A lot of their banks have very good renewal offers, so a lot of these clients are sticking with their banks,” he said. “On the broker side, obviously we can do our best to try to get them best deal possible, and the best product for their situation.
“I do think that the volumes on the renewal side sound high because there’s a lot coming up for renewal this year – but I don’t think they will be as high in terms of what brokers might expect to get, mainly because of the retention from the lenders.”
Monolines take a step back as banks’ renewal war intensifies
Monoline lenders have taken a step back on mortgage renewals compared to the banking giants, Zhaide said – a change from the days of the pandemic, when monolines were able to eke out business that might have previously gone to the leading banks.
“For the last year, [monolines] haven’t been as aggressive as the major banks have been,” he said. “So it’s been an interesting shift in paradigms where the major banks are at play now and the monolines aren’t. Post-2020, pre-2022, it was all the monolines. The banks would say, ‘We can’t match those rates.’”
The interest rate is clearly of utmost importance to borrowers, although Zhaide underlined the importance for brokers of emphasizing the extra value they can bring to clients in a range of different ways.
“The main thing is that we try to figure out not just what the best rate for the client is, but what will help them get the lowest cost of borrowing based off their financial situation and where they would like to be,” he said, “whether that’s freeing up cashflow or just paying down their mortgage quicker.
“I think that’s where clients will look for the most value when it comes to brokers – having them come up with that strategy rather than just looking at, ‘Here’s X rate or Y rate.’”
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