Bank mortgage renewal rates used to be 'take it or leave it.' Not anymore

financialpost.com:

Once upon a time, mortgagors nearing the end of their term would open their bank’s renewal letter, see offers based on horrendously high posted rates and obliviously accept them.

If you’re a mortgage lender, those were the good old days.

Nowadays, many borrowers have more mortgage savvy than a Reddit day-trader who’s watched The Big Short twice, and banks know it.

Lenders would prefer you didn’t shop around, but they know you’re out there surfing the net and scoping the competition. So, most have become more aggressive with rate offers from the get-go.

Our nation’s biggest bank, Royal Bank of Canada, recently stepped up its renewal game. It launched a new mobile app experience to conveniently renew a mortgage faster than a Tim Hortons drive-thru. And this time, unlike the banking days of yore, the bank isn’t plotting to give you a rate that feels like a practical joke.

“We are really trying to put the best foot forward at the digital interaction point and give the client a competitive rate,” explains Janet Boyle, RBC’s senior vice president of Home Equity Finance.

She says the bank routinely quotes automated renewal offers below the “Special Offers” it shows on its website rate page — and far below the high “posted rates” that banks use for things like discount and prepayment penalty calculations.

But why are banks more generous with rates today? Here are three reasons, among others:

1. Most Canadians now compare rates online, so it’s harder to fool them with a garbage offer.

2. Fixed rates are 26 to 32 per cent above the 10-year average, depending on the term. Heavily indebted borrowers are therefore more urgently seeking payment savings. That makes them even more likely to shop around.

3. In 2025 and 2026, an