According to Ron Butler of Butler Mortgage, this aggressive rate-cutting is driven by lenders trying to offset slowing mortgage originations while also competing for market share.
As banks jockey for position, major players like RBC, TD, and CIBC are offering discretionary rates well below those available just weeks ago. Butler notes that CIBC was the first to offer 3.99% insured rates, with most big banks now offering similar rates on a discretionary basis.
“The Big 5 are hungry right now,” says broker and rate expert Ryan Sims.
“I can’t figure out if it is a pure market share play, or if they somehow think that they will use the mortgage as the loss leader and then try to cross sell the insurance, bank accounts, credit cards, investments, etc.”
It’s a strategy that’s proven effective for Scotiabank, which revealed earlier this year that nearly 85% of its mortgage clients also holding other financial products like credit cards, insurance, and investment accounts. By bundling services, the bank boosts profitability even when offering mortgages at razor-thin margins.
As the rate war intensifies, other big banks may adopt similar tactics to maintain customer loyalty and profitability, using the mortgage as a gateway to deeper financial relationships.
“Banks seem to cycle every few years on this where they use a product, generally the mortgage, to get business in the door to up-sell more profitable lines,” Sims notes.
Are more 3-handle rates coming soon?
As mortgage rates start to dip below 4%, more lenders are expected to join the race to offer “3-handle” rates.
According to Tracy Valko, principal broker and founder of Valko Financial, the current 3.99% rate offered by some lenders is just the beginning.
“I do anticipate more lenders bringing out rates with a ‘3-handle’ soon,” Valko predicts. She adds that with the increasing competition, borrowers may shift back toward longer-term fixed-rate mortgages, especially those seeking stability or if variable rates fall slower than expected.
How long will this rate war last?
While borrowers are benefiting from the aggressive rate cuts, the question remains: how long will this mortgage rate war continue?
Sims believes the fierce competition will persist until the banks close out their fiscal year at the end of next month.
“I think until we get to Oct 31, the rate wars will continue,” Sims says. With year-end fast approaching, banks are eager to make their books “look good and pretty,” driving them to offer steep discounts.
However, Sims anticipates that after November 1, the competition may cool off, especially at the deep discount rates we’re seeing now.
Butler, however, offers a slightly broader view.
“It will last until the pain of the low margins becomes intolerable or mortgage origination really picks up,” he explains, hinting that this intense competition could continue for months, or even years, depending on market conditions.
Valko suggests that the fierce competition may ease once market stability returns. “When the market stabilizes or begins to turn around, banks may no longer feel the pressure to keep rates this low,” she explains. “But right now, competition is benefiting consumers significantly.”
Reminder: it’s not all about the lowest rate
While there’s a great deal of focus on finding rock-bottom rates, many clients are looking beyond just the lowest number.
Valko reminds us that, “Ultimately, while rate is a key factor, we’re seeing clients not just chase the lowest rate but seek out partners who will help them manage their mortgage over the long term.”
Mortgage brokers are a key resource for borrowers, offering competitive rates along with ongoing education, personalized advice, and feedback—especially as more borrowers choose variable mortgages, says Valko.
“The value of mortgage brokers here is that we not only provide the best rates but also deliver critical education and tools, ensuring clients understand how to make the most of market shifts,” she told CMT.