Banks Aren’t Always Matching the Lowest Renewal Rates — Borrowers Advised to Shop Around

The Myth of Automatic Rate Matching

For years, many Canadian homeowners have believed that when it comes time to renew their mortgage, their bank will automatically match the lowest market rate available. A new industry update has shown this is not always true.

Even though competition among lenders is fierce and millions of mortgages are up for renewal in the next 12 months, banks are not consistently offering the most competitive renewal rates to their existing customers. Instead, borrowers often receive higher-than-market rates unless they push back or shop around.

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What’s Happening in Renewals

Mortgage renewals are set to peak between 2025 and 2026, as five-year fixed borrowers from 2020 face their first renewal in a much higher interest rate environment.

• Many homeowners are receiving renewal offers from their banks that are 30–70 basis points higher than discounted rates available from brokers or competing lenders.
• Some banks rely on “loyalty stickiness,” expecting borrowers to simply accept the renewal for convenience.
• In many cases, borrowers who push back or negotiate are able to secure a lower rate—sometimes matching broker rates—but only if they ask.

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Why Banks Do This

Banks are profit-driven institutions. While they want to retain clients, they also count on customer inertia. Statistics show:

• A large percentage of borrowers renew directly without negotiating.
• Many homeowners avoid shopping around because of the perception that switching is complicated or costly.
• In reality, mortgage brokers highlight that transferring a mortgage at renewal is often straightforward and may save thousands of dollars.

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Expert Advice for Homeowners

Mortgage advisors stress that borrowers should never accept the first renewal offer without checking the market.

Steps to consider:

1. Get competing quotes from mortgage brokers and credit unions.
2. Ask your current bank to match the best available rate.
3. Consider shorter-term products if rates are expected to fall.
4. Factor in prepayment privileges and penalties, not just the rate.

One broker explained:

“Banks know most clients won’t shop around. But those who do can almost always secure a better rate, either from the same bank or elsewhere. The worst thing you can do is sign the first paper you’re sent.”

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Why This Matters

• With household budgets already strained, a difference of even 0.50% on a $400,000 mortgage renewal can mean $150–$200 more or less per month.
• Over the course of a five-year term, that adds up to tens of thousands of dollars in interest savings.
• As renewals peak in 2025, the advice is clear: homeowners must treat renewal shopping as seriously as their original mortgage search.

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📊 Quick Visual: Potential Renewal Savings

The takeaway for Canadian homeowners is simple: do not assume your bank will match the lowest renewal rates. Take the time to shop, negotiate, and compare—your wallet will thank you.