Millions of Canadians will renew their mortgages in 2025, many of whom will be coming off historic low rates secured during the pandemic. This transition will trigger renewal payment shock for many Canadians, as rates have doubled since 2020. However, homeowners have a significant advantage as big banks and nonbank lenders aggressively compete for mortgage renewals in Canada. With mortgage rates forecasted to change and lenders offering promotional renewal rates, here’s how to secure the best mortgage deal and protect your budget.
The Bank of Canada (BoC) has just cut its key policy rate by 25 basis points (0.25%) to 3%, responding to slowing economic growth and rising uncertainty over the possibility of US tariffs. With the prime lending rate now 5.20%, this move signals that further interest rate cuts could be on the way, reducing variable mortgage rates in Canada in the coming months.
What This Means for Your Mortgage:
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New variable mortgage rates may drop further if additional rate cuts occur.
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Fixed mortgage rates could decline as bond yields weaken following the BoC decision, though Canadian fixed rates tend to follow the direction of US bond yields.
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As the Bank continues to lower Canada’s policy rate, existing variable mortgages (VRM) will see their payouts accelerate, while adjustable mortgages (ARM) will see lower monthly payments.
If the BoC continues its rate-cutting path, Canadian borrowers could see lower mortgage payments and better mortgage renewal rates by mid-2025.
Why 2025 Is a Unique Year for Mortgage Renewals
More than 1.2 million mortgages, worth nearly $590 billion, are due for renewal in Canada. That’s half of all the mortgages in the country, according to CMHC, when most borrowers originally secured rates between 1% and 2.5%. Today, Canadian mortgage rates hover between 4% and 6%, causing major affordability concerns. Despite this, lenders fiercely compete for renewals so homeowners can explore multiple options to negotiate better mortgage rates.
What Are Lenders Doing to Keep Borrowers?
1. Big Banks: Defensive but Competitive
The Big Six banks (RBC, TD, BMO, Scotiabank, CIBC, and National Bank) control 75% of Canada’s mortgage market. But with higher mortgage rates impacting affordability, banks are trying to retain borrowers by:
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Rate-matching offers for loyal customers.
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Bundling home equity lines of credit (HELOCs), credit cards, and banking services to entice renewals.
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Expanding digital mortgage services to make renewing more convenient.
2. nesto: The Digital Lender Disrupting the Market
While big banks are defending their turf, nesto has emerged as the largest digital-only lender in Canada. After acquiring CMLS Group in June 2024, nesto now holds over $60 billion in mortgages, making it a direct competitor to the banks.
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Lower rates than big banks: According to Damien Charbonneau, co-founder and COO of nesto, the company offers interest rates 10 to 40 basis points below the banks, giving homeowners significant savings on their renewal.
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More borrowers switching: 50% of nesto’s mortgage originations in 2024 came from renewals—up from 43% in 2022.
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A shift away from banks: Over 80% of mortgage renewals at nesto were transferred from big banks, proving that more Canadians are choosing transparent and digital mortgage solutions and finding a lower rate without haggling.
How Much Can You Save with a Lower Rate?
Even a 40-basis-point (0.40%) reduction in mortgage rates can save homeowners thousands of dollars over a mortgage term. However, as of today, nesto’s rates are, on average, more than 40 basis points lower than those offered by the Big Six Banks.
For instance, based on last month’s average variable rate, a $500,000 mortgage at nesto’s 4.40% compared to 5.08% from the Big Six Banks could save a borrower over $11,700 in interest over five years. That’s a 68-basis-point (0.68%) advantage. On a $100,000 mortgage with a 25-year amortization, nesto’s monthly payment of $550.17 would be $39.09 lower per month, adding up to $2,345.40 in interest savings while also paying down an extra $983.07 in principal over the term.
Similarly, with fixed rates, a $500,000 mortgage at nesto’s 4.14% versus 5.02% from the Big Six Banks could save more than $14,700 in interest over five years—a difference of 88 basis points (0.88%). On a $100,000 mortgage, nesto’s monthly payment of $533.64 would be $49.11 lower, equating to $2,946 in interest savings while allowing borrowers to pay down an additional $1,270.79 in principal.
This is why it is essential to compare mortgage renewal rates in 2025. Shopping around ensures you don’t overpay and allows you to take advantage of lower rates, which can significantly reduce your monthly payments and total borrowing costs.
How to Get the Best Mortgage Renewal Rate in 2025
1. Start Shopping Early
Most lenders allow rate holds of 120 days before renewal. With nesto, you can hold rates for up to 150 days. Lock in a low rate early to avoid surprises.
2. Compare Your Options
Never accept your bank’s first renewal offer. Instead, compare rates from:
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Your existing lender
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A mortgage broker
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nesto – Canada's leading digital lender
3. Fixed vs Variable: Which Mortgage Strategy Works Best?
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Fixed mortgage rates currently offer stability and predictability.
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Variable mortgage rates could drop further with BoC rate cuts.
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Adjustable mortgages offer the advantage of lower payments, while variable mortgages have fixed payments during their entire term.
If you’re deciding between fixed vs. variable based on rates alone, they are both very similar after the most recent rate cut by the Bank of Canada. However, once you’re locked into a fixed mortgage, you’ll pay a penalty to break it. Variable mortgages carry some risk but can potentially save you over the first couple of years of a 5-year term. If you have room for increased payment should inflation resurge and the BoC takes interest rates higher, then go with variable. If you’re risk-averse and would rather pay a bit more but have peace of mind, then a fixed rate might be more suitable.
4. Leverage Lender Incentives
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Ask banks to match nesto’s lower rates.
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Some lenders offer cashback deals to reduce upfront renewal costs.
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New stress test exemptions allow some borrowers to switch lenders without requalifying.
How a Potential US-Canada Trade War Could Impact Your Mortgage
A 25% tariff on Canadian exports could trigger economic uncertainty, weaken the Canadian dollar, and slow the housing market. If this happens:
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The Bank of Canada may cut interest rates aggressively to support economic growth as inflationary resurgence is a likely possibility due to price pressures.
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Mortgage rates could decline further, making variable rates even more attractive.
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Borrowers should monitor economic updates and our mortgage rate forecast to time their mortgage renewal for the best possible rate.
Make Lenders Compete for You
The Great Mortgage Renewal in 2025 presents a rare opportunity to negotiate better mortgage terms. Whether you stay with your bank or switch, homeowners have more power than ever to secure the lowest mortgage rates.
nesto is leading the way with mortgage renewal rates 40 or more basis points lower than big banks, helping Canadians save thousands on their mortgages.
Ready to find the lowest mortgage renewal rate? Check out nesto’s special offers and speak with a mortgage expert to compare rates today.