Mortgage Rates Are Rapidly Coming Down and the Big 5 Are Slower to Pass on Better Rates

The mortgage landscape in Canada is shifting dramatically, but not everyone is benefiting equally. While mortgage rates are on a clear downward trajectory throughout 2025, the Big 5 banks are moving at a measured pace—leaving borrowers waiting for rate reductions while alternative lenders move more quickly with competitive offerings.

This isn’t just a minor market inefficiency. It’s a systematic difference that savvy borrowers and investors need to understand and act upon.

The Rate Drop Reality

Mortgage rates are expected to decrease in 2025, with experts predicting gradual 25-basis-point cuts throughout 2025. Industry analysts suggest variable rates are projected to drop to around 4 percent in 2025—still high by historical standards but lower than fixed rates.

About 60% of all outstanding mortgages in Canada will renew in 2025 or 2026, meaning millions of Canadians are facing renewal decisions in a rapidly changing rate environment. The timing couldn’t be more critical.

Yet here’s where the story gets interesting: while a steady stream of cuts has been rolled out by the country’s other mortgage lenders, including brokerages, non-bank lenders, and credit unions, TD and BMO made more measured rate reductions to select mortgage terms.

The Big Bank Approach

The Big 5 banks—RBC, TD, BMO, Scotiabank, and CIBC—have historically dominated the Canadian mortgage market through brand recognition and customer relationships. However, their approach to rate adjustments has been more cautious in today’s changing environment.

While RBC led the charge with aggressive, across-the-board cuts, trimming rates on nearly every term with reductions as deep as 0.65 percentage points, this kind of rapid response has been less common among the other major banks.

Several factors may contribute to this more measured approach:

• Large institutions often have more complex approval processes
• Conservative lending practices that prioritize stability
• Focus on maintaining existing customer relationships
• Emphasis on protecting profit margins during uncertain times

The Alternative Advantage

This is where non-bank lenders like Dez Capital can create genuine value for borrowers and investors alike. We’re structured to respond more quickly to market changes than larger traditional institutions.

Responsive Rate Adjustments: When market conditions change, specialized lenders often can adjust pricing more rapidly than large banks.

Focused Expertise: Our specialization in residential, construction, development, and commercial loans in the Golden Horseshoe Area means we understand local market dynamics and can respond accordingly.

Investor-Aligned Thinking: Our prudent investment philosophy focuses on delivering stable returns—which means we’re motivated to offer competitive rates that attract quality borrowers while maintaining sound lending practices.

Strategic Implications for Smart Money

For real estate investors and developers, this rate environment presents opportunities worth considering. Rate differentials between different types of lenders can create potential savings for those willing to explore alternatives to traditional banking relationships.

Consider the potential impact: even a modest rate difference can translate to meaningful savings on larger mortgages—savings that flow directly to your investment returns or development margins.

More importantly, alternative lenders may provide faster approvals and more flexible terms, potential advantages in competitive real estate markets where timing can be crucial.

The Bottom Line

The mortgage rate environment of 2025 is creating different opportunities for different borrowers. Those who automatically renew with big banks may not capture the full benefit of falling rates as quickly as those who shop around and consider specialized lenders.

At Dez Capital, we see this environment as an opportunity to demonstrate our value proposition: prudent, responsive lending focused on delivering competitive solutions when our clients need them most. Whether you’re refinancing existing properties, financing new acquisitions, or planning development projects, exploring your options with the right lending partner may provide advantages worth considering.

The opportunity exists. The question is whether you’ll explore it.