16 August 2018

Although it’s a fact that mortgage stress test contributes to cooling the market activity (and that banks don’t seem to compete using renewal interest rates), there may be another reason why more borrowers decide to stick with their initial lenders.

It could seem illogical that borrowers don’t switch lenders, while banks still don’t motivate them to stay.

According to the CMHC, refinances were also down last year, and it’s probably because fewer borrowers chose leveraging their homes as the prices growth slowed down in Canada’s largest markets.

“In my opinion, it’s because borrowers faced stricter environment,” – said Bourassa-Ochoa. “People wanted to see what would happen as rates started to rise and stricter rules were introduced. And this wait-and-see approach applied to refinances, home renovations or changing lenders and raising the loan amount.”