The Heads of Canada’s Top Banks Expect Many Mortgage Holders to Renew at Lower Rates Over the Next Two Years

As interest rates continue to decline, Canadian banks are bracing themselves for a renewed competition in the mortgage market. 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 lenders compete for a larger share of the market.

Royal Bank of Canada CEO Dave McKay Predicts 60% Renewal Rate at Lower Rates

According to Royal Bank of Canada (RBC) chief executive Dave McKay, 60% of the bank’s customers will renew their mortgages at lower rates in 2025. McKay also stated that out of those who will renew at higher rates, 80% will meet the requirements of the industry’s mortgage payment stress test, which essentially means they can manage to make higher payments.

Toronto-Dominion Bank Sees a Third of Mortgages Renewing from Higher Rates to Lower Rates

Toronto-Dominion Bank (TD) chief operating officer Raymond Chun shared similar sentiments. He stated that about a third of the mortgages coming up for renewal in 2025 and 2026 are expected to renew at lower rates, as clients take advantage of the declining interest rate environment.

A Big Renewal Wave is Coming Through

RBC analysts have noted that about 55% of all mortgages with Canadian banks are expected to be renewed in the next two fiscal years, while 85% will be renewed in the next three fiscal years. These factors could lead to a mortgage war, as Canadians hunt for lower rates and banks look to improve their existing market share.

Banks Prepare for Competition

To prepare for this competition, banks have made significant investments in their mortgage operations. RBC has expanded its sales force and TD has brought in mortgage specialists at its branches across the country.

A Competitive Market

According to Canadian Imperial Bank of Commerce (CIBC) chief executive Victor Dodis, the market is highly competitive, with banks vying for market share. However, Dodis expressed confidence that CIBC can hold its own in the competition and grow profitably.

The Impact of Regulations on Banks’ Growth

Some analysts have noted that regulations imposed on TD’s growth in the United States may make the landscape even more competitive, as the bank may look to aggressively compete at home to meet its financial needs.

Conclusion

As interest rates continue to decline, Canadian banks are bracing themselves for a renewed competition in the mortgage market. With many mortgage holders expected to renew at lower rates over the next two years, lenders will need to be prepared to offer competitive rates and terms to attract clients. The stage is set for a mortgage war in Canada, with banks competing fiercely for market share.

Key Statistics:

• 60% of RBC customers are expected to renew at lower rates in 2025
• 80% of those renewing at higher rates will meet the requirements of the industry’s mortgage payment stress test
• 55% of all mortgages with Canadian banks are expected to be renewed in the next two fiscal years
• 85% of all mortgages with Canadian banks are expected to be renewed in the next three fiscal years

Related Articles:

• The Best Mortgage Rates in Canada Right Now
• Will Mortgage Rates Keep Drifting Lower?

Bookmark Our Website and Support Our Journalism:

Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.