Staying with the same bank for your mortgage could cost you roughly $1,860 a year — that’s what Ratehub’s latest comparison found when they lined up the average Big Five five-year fixed rate (4.49%) against the lowest available market rate (4.04%). On a national average home price of $672,784, the difference works out to $155 a month, or $9,300 over a typical five-year term. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Canada’s banking landscape is unusually concentrated. Fewer than 80 commercial banks operate on Canadian soil, and the Big Five — RBC, TD, Scotiabank, BMO, and CIBC — control roughly three-quarters of all consumer business. That concentration creates a market where inertia is the default. Most people never leave. And that’s exactly what the banks are counting on.
If you’re one of the 69% of Canadians who have been with the same primary lender for more than a decade, the question isn’t whether you’re being overcharged — it’s by how much. The gap between loyalty and shopping around is real, and it’s getting wider as the 2026 renewal wave approaches.
What the Numbers Actually Say
The figures are hard to ignore. A 45-basis-point spread on a $624,277 mortgage — the amount after a 10% down payment on the national average home price — means monthly payments of $3,452 at the Big Five average rate versus $3,297 at the best available rate. That’s $155 a month that stays in your pocket if you switch. Over five years, you’re looking at $9,300 in potential savings.
I’d call that a meaningful chunk of any household budget. And it’s not just the mortgage. Chequing account fees of $16 a month add up to $960 over the same five-year term. If that money were sitting in a TFSA earning 6%, it would grow to roughly $1,118 — tax-free. The gap between what you’re paying and what you could be paying exists across every product category, from savings accounts to credit cards.
How Much Loyalty Really Costs
The 2026 renewal wave is shaping up to be one of the largest in Canadian history. The Canada Mortgage and Housing Corporation reports that 1.15 million mortgage holders will renew in 2026, and about 60% of all outstanding mortgages are set to renew by the end of that year. For those with five-year fixed contracts, payment increases of 15% to 20% are expected. For variable-rate mortgages with fixed payments, the median payment could reach $2,190 by the end of 2027 — a 54% increase from February 2022 levels.
What makes this especially painful is that many borrowers who stuck with their lender through the variable-rate spikes of 2022–2023 now face amortization compression — their balances stayed roughly the same while their timelines shortened, forcing higher payments. Some are still paying down the same principal they started with. The banks that collected those higher payments are now offering renewal rates that look suspiciously like a reward for loyalty. In reality, it’s a penalty for not leaving.
What I notice is that the people who switch are almost never the ones who regret it. The ones who stay — and pay the tax — rarely realise what they’re missing until they add it up.
Where Loyalty Costs the Most
Renewing Without Shopping Around
Your current lender must send a renewal statement at least 21 days before your term ends. They usually mail an offer about 30 days before maturity. That offer is rarely the best rate available. Lenders can offer renewal rates 1% above market, a gap that constitutes the so-called Loyalty Tax. The three paths at renewal are straightforward: refinance to restructure debt, switch to another lender, or stay if the offer is competitive. Most people choose option three without ever looking at option two.
Ignoring the Fees That Add Up
That $16 monthly chequing account fee might not feel like much, but over a 25-year mortgage term it grows into thousands of dollars — money that could have been earning compound returns in a TFSA. Many Big Five chequing accounts charge similar fees, and switching to a no-fee account or a digital bank eliminates that cost entirely. It’s not just the mortgage that’s costing you; it’s the whole relationship.
Treating Points as Real Savings
Canadians belong to an average of 15 loyalty programs, and 28% redeem points once a year or less. The $13 to $15 billion sitting unredeemed across the country represents spending power that’s effectively frozen. Scene+ members who redeem within 30 days of earning get 1,000 points equal to $10 — a modest return compared to the hundreds you’d save by switching mortgage lenders. Points are a perk, not a reason to stay.
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| Scenario | Interest Rate | Monthly Payment | Annual Cost | 5-Year Cost |
|---|---|---|---|---|
| Staying with Big Five lender | 4.49% | $3,452 | $41,424 | $207,120 |
| Switching to best market rate | 4.04% | $3,297 | $39,564 | $197,820 |
| Difference | 0.45% | $155 | $1,860 | $9,300 |
A Practical Guide to Shopping Around
Start Before the Renewal Letter Arrives
You don’t need to wait for your lender’s offer. Switching lenders can secure rate holds up to 120 days before your term ends, giving you a 90-day window that your current lender won’t offer. That buffer matters — in late November 2025, five-year Canadian bond yields jumped from 2.70% to just over 3% in less than two weeks. Having a rate locked in before that kind of movement protects you from market volatility.
Work With a Mortgage Broker
Brokers have access to more than 20 lenders, including monoline lenders and credit unions that often undercut the Big Five. A broker can run the numbers, compare terms, and handle the paperwork for switching lenders. The process is the same as a new mortgage application: income verification, credit check, property appraisal. The difference is that you’re not starting from scratch — you already have a track record of payments.
Know What You’re Signing
Switching lenders usually means a new mortgage contract with new terms. Read the fine print on prepayment penalties, portability options, and renewal clauses. Some lenders offer cash-back incentives or reduced legal fees for switchers — those can offset the appraisal and discharge costs your current lender may charge. If your situation is complex — self-employment income, a recent credit event, or a property that’s lost value since purchase — a qualified legal or mortgage professional can help you avoid costly mistakes.
Factor in the Full Picture
Don’t compare rates in isolation. A lower rate with high switching costs might not save you money in the short term. Calculate the break-even point: how many months will it take for the monthly savings to cover the switching costs? If you’re planning to move within two years, a shorter-term product with a lower rate might make more sense than a five-year fixed. The broader picture of your debt and savings matters just as much as the rate.
Frequently Asked Questions About Switching
Will switching lenders hurt my credit score? ▾
What if my home value has dropped since I bought it? ▾
Can I switch lenders if I’m in a variable-rate mortgage with negative amortization? ▾
How much time do I need to switch lenders before my renewal date? ▾
What costs are involved in switching? ▾
2026 Will Test Canadian Banking Habits
The scale of the 2026 renewal wave — 1.15 million mortgages, with 60% of all outstanding mortgages expiring by year’s end — means that for the first time in years, a large chunk of Canadian households will be forced to make an active decision about their lender. The ones who treat that decision as a negotiation rather than a formality will be the ones who save thousands.
Naga Parvatharajan, CEO of Ratehub.ca, put it plainly: every single person benefits from shopping around. You only stand to gain by researching the market and making sure you’re getting a competitive rate. The alternative — signing the renewal letter your lender mails you — is the most expensive option on the table.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Beyond the Headlines: Understanding the Geopolitical Risks Impacting Your Investments.
Sources and Further Reading
Canada Car Insurance Tips: Association Discounts Explained — A practical look at how loyalty discounts work in other financial products and where they actually save you money.
Building Generational Wealth: Lessons from High-Net-Worth Families — How the habit of shopping around for financial products compounds over decades.
Ratehub (2025). How much is bank loyalty really costing you? 🔗
Shawn Selanders (2025). Bank Loyalty Costs Thousands. 🔗
Tully Mortgages (2025). Mortgage Renewal 2026: The Loyalty Tax. 🔗
The Wise Marketer (2025). Canadians are rethinking loyalty as everyday rewards take priority. 🔗
