Research Outline

HELOCs - Canada's Vulnerable Competitors


To understand what makes HELOC lenders in Quebec and Western Canada most vulnerable to competition, and to identify which competitors are most vulnerable.

Early Findings

Canada’s HELOC Competitors

  • Each lender’s HELOC has its own interest rate based on how the loan is structured, so borrowers must negotiate the best rates based on their individual situations. Additionally, each loan has a particular set of fees, and these vary by lender and borrower situation. Because of this, rates from each lender may vary – and those with less-than-optimum rates would qualify as vulnerable competitors in this market.
  • The minimum amount a borrower can get on a HELOC differs by bank, though the maximum is set to a standard “65% loan-to-value” of the home. Lenders offering the lowest minimum amounts include: BMO Homeowner ReadiLine and ScotiaBank STEP, both of which offer $0 as the minimum amount to borrow, and RBC Homeline Plan, with a minimum of $5000.
  • Those with the highest minimum amounts, and therefore those most vulnerable to competition, include Manulife One, with a minimum of $50,000, ING Direct Canada HELOC, with a minimum of ($15,000 or $50,000, depending on whether the customer has an ING mortgage), as well as Desjardins Versatile Line of Credit and National Bank All-in-One, both with a minimum of $25,000.
  • Lenders that offer the option to convert the loan to a fixed rate are best-suited to the marketplace, whereas lenders not offering this option are vulnerable to competition. These latter lenders include BMO Homeowner ReadiLine, CIBC Home Power, Desjardins Versatile Line of Credit, PC Financial Secured Borrowing Account, and ScotiaBank STEP.
  • Lenders offering revolving / re-advanceable balances are best-suited to serve the most customers. Those not offering this service are most vulnerable to competition. In Canada, ING Direct Canada HELOC doesn’t offer this.
  • Lenders charging monthly fees are also most vulnerable to competition. These include ManuLife One and National Bank All-in-One.

Current Mortgage Rates (Quebec & Western Canada)

  • A comparison of the current HELOC rates (on an amount of $200,000) for Quebec, Alberta, British Columbia, Manitoba, and Saskatchewan follow.
  • In Quebec, analysis shows that, among lenders Big 6 Bank, ScotiaBank, TD Bank, and Tangerine, both ScotiaBank and TD Bank has the highest percentage rates (at 4.45%), making them most vulnerable to competition.
  • In Alberta, analysis shows that, among lenders MotusBank, ScotiaBank, TD Bank, CanWise Financial, Tangerine, and Laurentian Bank, the three lenders with the highest rates (at 4.45%) are SotiaBank, TD Bank, and CanWise Financial. The same lenders were compared for British Columbia, with the same results being returned. The same comparison and results showed for Manitoba and Saskatchewan, as well.

Mini-Case Study

  • Competitor Bank of Nova Scotia (ScotiaBank) is losing “its standing as Canada’s most international bank,” due to the bank’s exits in various Caribbean markets, which brings its down to a presence in only 33 countries. This will put it behind its major competitor, Royal Bank of Canada, which has a presence in 36 countries.
  • Additionally, ScotiaBank’s Q2-2019 earnings report showed less-than-expected profit results, largely due to loan loss provision mis-estimates for acquisitions and such. Although ScotiaBank is one of the largest banking and lending institutions in Canada, there are multiple issues making them more vulnerable to competition than they’d appear.