The Battle for Market Share
The heads of Canada’s top banks are anticipating a significant renewal period in the next two years, with many mortgage holders expected to be able to renew at lower rates. As lenders compete for a larger share of the market, the stage is set for a mortgage war.
Royal Bank of Canada Takes the Lead
According to Royal Bank of Canada (RBC) chief executive Dave McKay, 60% of the bank’s customers will renew at lower rates in 2025. Of those who will renew at higher rates, he said that 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: A Third of Mortgages Renewing at Lower Rates
Toronto-Dominion Bank (TD) chief operating officer Raymond Chun noted that about a third of the mortgages coming up for renewal in 2025 and 2026 were also renewed in the past few years. People had renewed into short-term rates, anticipating lower interest rates. Not everyone is actually renewing at higher rates; a third of the renewals are at lower rates.
The Renewal Period: A Big Opportunity
About 55% of all mortgages with Canadian banks are expected to be renewed in the next two fiscal years and 85% 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.
TD: On the Offence
TD has made several investments to boost its mortgage operations, including bringing in mortgage specialists at its branches across the country. Chun said that TD is looking forward to an active season, with a goal of growing profitably and taking market share as it goes forward.
Canadian Imperial Bank of Commerce: Confident of High Renewal Rate
Canadian Imperial Bank of Commerce (CIBC) chief executive Victor Dodisaid his bank expects to renew about 200,000-plus mortgages in each of the next three years. 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.
The Competitive Landscape
Some analysts say that the restrictions imposed on TD’s growth in the United States could make the landscape even more competitive because the bank may look to aggressively compete at home to meet its financial needs. The market is highly competitive, with the premier league of banking as Dodis described it.
Conclusion
The mortgage war is looming, and Canadian banks are preparing for a significant renewal period. With many mortgage holders expected to renew at lower rates, lenders will be competing fiercely for market share. As TD’s Chun noted, "We live in a very competitive market… But we know that we can hold our own." Will your bank come out on top?
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