Mortgage Renewals Expected to be a Competitive Market for Canadian Banks
The heads of Canada’s top banks are expecting 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 (RBC) CEO Dave McKay Predicts 60% Renewal Rate at Lower Rates
Royal Bank of Canada chief executive Dave McKay said that 60 per cent of the bank’s customers will renew at lower rates in 2025. Of those who will renew at higher rates, he stated that 80 per cent will meet the requirements of the industry’s mortgage payment stress test, which essentially means they can manage to make higher payments.
Mortgage Payment Stress Test: A Crucial Factor in Mortgage Renewals
The mortgage payment stress test is a crucial factor in determining whether a borrower can afford their mortgage payments. The test ensures that borrowers have sufficient income to meet their debt obligations and maintain their current standard of living. While some analysts argue that the test has become too stringent, McKay’s comments suggest that it remains an effective tool for lenders.
Toronto-Dominion Bank (TD) Invests in Mortgage Operations
Toronto-Dominion Bank has made several investments to boost its mortgage operations, including bringing in mortgage specialists at its branches across the country. TD CEO Bharat Masrani stated that the bank is "confident" of a high renewal rate and is preparing for an active season.
Why a Mortgage War Could be Looming
About 55 per cent of all mortgages with Canadian banks are expected to be renewed in the next two fiscal years, while 85 per cent will be renewed in the next three fiscal years. These factors could lead to a mortgage war, RBC analysts said in a note in November, as Canadians hunt for lower rates and banks look to improve their existing market share.
Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodis: Renewal Rate Expected to be High
Canadian Imperial Bank of Commerce chief executive Victor Dodis stated that his bank expects to renew about 200,000-plus mortgages in each of the next three years. He also emphasized that CIBC has a process in place to reach out to its clients five months before renewal and has invested in digital processes such as mobile mortgage advisers.
What Does this Mean for Canadian Homeowners?
As lenders compete fiercely for market share, Canadian homeowners may find themselves with more negotiating power than ever before. With lower rates expected to be available, borrowers may be able to secure better deals on their mortgages. However, it’s essential for homeowners to carefully evaluate their options and choose a lender that best meets their needs.
Conclusion
The upcoming mortgage renewal season is shaping up to be a highly competitive market for Canadian banks. As lenders compete fiercely for market share, Canadian homeowners may find themselves with more negotiating power than ever before. It remains to be seen how the competition will play out, but one thing is certain: it’s an exciting time for those in the market.
Key Takeaways
- 60 per cent of RBC customers are expected to renew at lower rates in 2025.
- TD has invested in mortgage operations, including bringing in mortgage specialists.
- CIBC expects to renew about 200,000-plus mortgages in each of the next three years.
- A mortgage war could be looming as lenders compete for market share.
Recommended Reading
- The best mortgage rates in Canada right now
- Will mortgage rates keep drifting lower?
By staying informed and up-to-date on the latest developments, Canadian homeowners can make informed decisions about their mortgage renewals.
