Will Mortgage Renewals in 2026 Trigger a Rate War in Canada?

Over half of all Canadian mortgages are renewing in the next two years. That’s a massive wave of homeowners who locked in rates at 2-3% suddenly facing a jump to 4-5% or higher. And banks know it.

The question isn’t whether lenders will compete for this renewal business — it’s how aggressive they’ll get. Here’s what’s really happening behind the scenes, and what it means if you’re renewing soon.

Why Are Banks Suddenly Competing So Hard for Renewals?

According to RBC analyst Darko Mihelic, more than 50% of mortgages held by Canadian banks will renew between 2025 and 2027. That’s hundreds of billions in potential business up for grabs.

For someone who got a mortgage in mid-2020 at 2%, even a half-percent difference at renewal could save them $1,000 a year. That’s real money.

Banks aren’t just sitting around waiting for renewal notices to go out. They’re actively hunting. Mihelic notes that mortgage brokers are “mining” their databases right now — reaching out to clients months before renewal to lock them in early with better offers.

Here’s the thing: loan growth across most categories is basically stalled in Canada. Mortgages are one of the few ways banks can hit their targets. Losing a renewal to a competitor stings twice — you lose the customer and the revenue.

Is TD Really Going After Market Share Because of U.S. Troubles?

TD’s situation is unique. After getting slapped with restrictions on U.S. expansion due to compliance issues, the bank needs somewhere to park its growth ambitions. Mihelic suggests Canadian mortgage renewals are the obvious target.

If TD decides to go hard on renewals — offering ultra-competitive rates to grab volume — other Big Six banks will have to respond. That’s how rate wars start.

John Webster, former CEO of Scotia Mortgage Authority, called recent bank pricing “silly business.” He thinks it’s driven by quarterly targets and isn’t sustainable long-term. “I suspect in the first quarter there will be more rationality in pricing,” he said. “It’s not sustainable.”

But here’s the catch: even if big bank pricing normalizes, the renewal wave doesn’t stop. Brokers and credit unions will still be circling. You’ve got options.

What This Means If You’re Renewing in 2026

You’re in the driver’s seat — if you shop around. Your current lender is counting on inertia. They know most people just sign the renewal letter and move on. Don’t do that.

Here’s what to do instead:

• Start shopping 120 days before renewal. That’s when you can lock in a rate without penalty. Waiting until the last minute limits your options.
• Get your broker involved early. They can compare offers from multiple lenders — including ones your bank won’t tell you about. Arch Canada can connect you with a broker who knows the renewal game.
• Don’t assume your bank will match. Sometimes they will. Sometimes they won’t. But you need a competing offer first.
• Watch for “loyalty penalties.” Some lenders offer better rates to new customers than existing ones. If your bank won’t budge, switching might save you thousands.

According to the Bank of Canada, the policy rate is expected to stay range-bound through 2026. That means renewal rates won’t nosedive, but they also shouldn’t spike further. You’re likely renewing into a 4-5% environment if you’re coming off a 2020-2021 term.

Can Brokers Still Compete with Big Bank Renewal Offers?

Webster’s comment about “silly business” wasn’t a compliment — it was a warning. Big banks have been pricing renewals below what’s rational to hit quarterly numbers. That’s tough for brokers to beat in the short term.

But brokers have advantages banks don’t. They can shop multiple lenders in minutes. They know which credit unions and monoline lenders are hungry for business. And they’re not beholden to a single product lineup.

If your bank offers you 4.89% on renewal, a broker might find 4.59% somewhere else. Over a $400,000 mortgage, that’s $1,200 a year. Worth a phone call.

The bigger point: this renewal wave is creating real competition. That’s good for you. Don’t leave money on the table by auto-renewing.

Frequently Asked Questions

What is a mortgage renewal rate war?

A mortgage renewal rate war happens when lenders compete aggressively to keep or win customers whose mortgages are expiring. With over 50% of Canadian mortgages renewing by 2027, banks are offering lower rates to capture this business. According to RBC, even a 0.5% rate difference could save homeowners $1,000 annually.

Should I wait until my renewal date to shop around?

No. You can start shopping up to 120 days before your renewal date without penalty. Waiting until the last minute limits your options and gives your current lender less incentive to negotiate. Brokers recommend starting early to lock in the best possible rate.

Will my bank automatically give me their best rate at renewal?

Not usually. Banks often send renewal offers that are higher than what they’d offer a new customer. John Webster, former CEO of Scotia Mortgage Authority, noted that banks rely on customer inertia — most people just sign the renewal letter. You need to shop around or use a broker to get competitive offers.

Can I switch lenders at renewal without penalty?

Yes. At the end of your mortgage term, you can switch lenders without paying a penalty. You will have legal and appraisal costs (usually $1,000-$1,500), but many lenders will cover these fees to win your business. A broker can help you compare offers and decide if switching makes sense.

Are big bank renewal rates actually better than broker rates right now?

Sometimes, but not always. Big banks have been pricing aggressively to meet quarterly targets, which can temporarily beat broker rates. However, brokers have access to credit unions and monoline lenders that banks don’t offer. The only way to know is to compare — a broker can shop multiple lenders in one go.