‘Right now, [banks] are very aggressive – but they’ll cool off’
Major Canadian banks are showing increasing aggression in the rate war as lenders battle for mortgage market share – and that’s presenting fresh challenges for nonbanks and their efforts to grab broker business, according to a multi-decade industry veteran.
Dwight Trafford (pictured top), principal broker at Rock Capital Investments, told Canadian Mortgage Professional that lender landscape isn’t exactly new, with banks often taking a combative approach on rates in a cooler purchase environment.
But it’s still required other lenders to adapt to that intensity. “The banks are picking up a lot of business right now because of their aggressiveness on rates,” Trafford said. “Monolines are going to have to come up with more products and more reasons why we would use them.”
Banks periodically become much more competitive on pricing, pulling volume away from other lenders, although Trafford said the trend has usually tended to eventually reverse throughout his long stint in the industry.
“I’ve been doing this 36 years and I’ve seen banks get aggressive and then cool off,” he said. “Right now they’re very aggressive – but they’ll cool off. Then monolines will become a better option. Right now, they’re not, at least in some situations.”
Many prospective homebuyers pulled back from the housing market in recent years as interest rates jumped and economic unease grew. That’s seen brokers and lenders increasingly turn their attention to the refinance and renewal sectors, with scores of Canadians seeing their mortgages renew in 2025 and 2026 – often at much higher rates than they first took out during the pandemic.
In that environment, brokers have long reported how difficult it’s become to offer clients a better rate than the bank, although alternative and private lending options have also gathered momentum because some stretched borrowers are unable to find financing with mainstream lenders.
Banks increasingly dominant in renewal race
When brokers are competing with banks on renewal, they often have little option but to play a long game, advise their client to stick with their bank, and trust that the good-faith approach will pay off down the line.
“A lot of the time when the client is able to afford the payment and they just want to renew at the best rate, I almost feel like the broker has been to some extent pushed out of that market where the banks are often offering better renewal rates,” British Columbia-based broker Lev Keselman told CMP last year.
“From a broker’s point of view, you can still give them advice, tell them ‘You’re getting a good rate from your bank.’ Advise them on what kind of term [they should choose] Maybe help them negotiate. Then say, ‘Save my number. Contact me in five years or in three years, whenever it comes up for renewal again,’ and hopefully it’s a different market at that point in time.”
The removal of the stress test for uninsured mortgage borrowers at renewal even sparked reports of a growing war between major banks to bring in renewing borrowers and hold on to their existing customer base.
Brokers – and monolines – remain essential mortgage market players
But while banks are increasingly set on wrapping borrowers up at renewal time, the prominence of brokers in the market is still growing.
Consumer research by Mortgage Professionals Canada (MPC) released last month showed 38% of mortgage shoppers polled between February 5 and 25 used a broker, an increase of six percentage points over the same time last year.
Fifty-four percent (54%) of respondents said they chose a broker because of their access to the best rates, although that figure was down by five percentage points compared with 2024.
Despite the pressure on rates, Trafford is confident monolines will remain relevant in the market. “They’ll always be around and they’ll survive what’s going on,” he said. “But they will have to come up with more products and more reasons why brokers would use them.”
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