Are Mortgage Renewal Rates About to Drop Because Banks Need Your Business?

Your mortgage renewal notice just arrived. The new rate looks… higher than you’d hoped. But here’s the thing: you might have more leverage than you think. With over half of all Canadian mortgages renewing in the next two years, banks are scrambling to keep you from switching. That competition could save you thousands.

Why Are Banks Suddenly Competing So Hard for Mortgage Renewals?

Banks need your renewal business to hit their growth targets. According to RBC analyst Darko Mihelic, more than 50% of mortgages held by Canadian banks will renew between now and 2026. That’s massive. With loan growth slowing across the board, your renewal isn’t just another transaction — it’s a chance for lenders to steal market share from competitors.

Here’s what’s driving this: TD Bank can’t expand in the U.S. right now due to regulatory restrictions. CIBC’s struggling to gain traction. And every major bank views mortgages as an “anchor product” — once they’ve got your mortgage, they’re betting you’ll stick around for credit cards, lines of credit, and investment accounts too.

Bottom line? They’re pricing aggressively to keep you. That’s good news if you’re willing to shop around.

How Much Could Shopping Around Actually Save You?

Let’s say you locked in at a rock-bottom rate back in June 2020. If you can negotiate just 50 basis points (0.50%) lower than your bank’s initial renewal offer, you’d save roughly $1,000 per year. On a $400,000 mortgage, that’s real money.

And it’s not just about haggling with your current lender. Mortgage brokers are actively reaching out to clients before their renewal dates, mining their databases for people who could benefit from switching. If you haven’t heard from yours yet, you might want to connect with a broker who can compare offers across multiple lenders.

The gap between what your bank offers in the renewal letter and what they’ll actually give you if you push back can be substantial. Don’t assume the first number is final.

Is This Pricing War Sustainable or Just a Short-Term Blip?

John Webster, former CEO of Scotia Mortgage Authority, calls the current pricing “silly business.” He thinks it’s driven by banks trying to meet quarterly targets, not a permanent shift. His prediction? Things will calm down by early 2025.

But even if rates stabilize, the competitive pressure won’t disappear overnight. As long as TD’s stuck domestically and CIBC’s chasing market share, you’ve got room to negotiate. The key is acting before this window closes.

Webster’s right that this pace isn’t sustainable long-term. Banks can’t keep undercutting each other forever. But right now, in late 2024 and early 2025, you’re in the driver’s seat. Use it.

What Does This Mean for You If You’re Renewing Soon?

Don’t just sign the renewal letter. Start shopping at least 120 days before your maturity date. That gives you time to compare rates, negotiate, and switch lenders if needed without rushing.

Talk to a mortgage broker. They can access rates from multiple lenders — often better than what you’ll see advertised. And they’re motivated to find you a deal because that’s how they get paid.

If you’re renewing with the same lender, negotiate. Tell them you’re comparing offers. Ask for a rate match. The worst they can say is no, but banks know you have options right now. That changes the conversation.

Consider switching if the savings justify it. Yes, there’s paperwork. But if you’re saving $1,000+ per year, that’s $5,000 over a five-year term. Worth it.

What’s Happening with Insolvencies and Rent — And Why It Matters

Canadian insolvencies edged down 0.9% in September 2024, but they’re still up 8.9% year-over-year. Alberta leads the country with an insolvency rate of 0.425 per 1,000 people. According to Statistics Canada, proposals (where borrowers renegotiate terms) jumped 9.5%, and bankruptcies rose 6.7%.

That’s a signal: Canadians are stretched. High debt plus rising rates equals financial strain. If you’re renewing into a higher rate, make sure you can actually afford the new payment. Run the numbers before you commit.

On the rental side, Toronto renters spend 48.5% of their income on housing — an average of $1,691 per month for a one-bedroom. Compare that to Montreal, where renters pay just 26.3% of income ($960/month). If you’re renting and trying to save for a down payment, your city matters. A lot.

Frequently Asked Questions

When should I start shopping for my mortgage renewal?

Start at least 120 days before your maturity date. This gives you time to compare offers, negotiate, and switch lenders if necessary without feeling rushed. Some brokers can lock in rates even earlier.

Can I negotiate my renewal rate with my current lender?

Yes. Banks often send renewal letters with higher rates than they’re willing to accept. Tell them you’re comparing offers from other lenders. Many borrowers save 0.25% to 0.50% just by asking.

How much does it cost to switch lenders at renewal?

At renewal, there’s no penalty to switch. You may pay for a new appraisal ($300-$500) and legal fees ($500-$1,000), but many lenders cover these costs if you’re bringing them your business. Ask upfront what fees apply.

Why are banks competing so hard for renewals right now?

Over 50% of Canadian mortgages renew between now and 2026. With loan growth slowing, banks see renewals as a major opportunity to gain market share. TD’s U.S. expansion freeze and CIBC’s market share struggles are intensifying the competition.

What happens if I just sign the renewal letter without shopping around?

You’ll likely pay more than you need to. Renewal letters often quote higher rates than what the lender will actually offer if you negotiate. Even a 0.50% difference saves roughly $1,000 per year on a typical mortgage.