Some banks rethinking strategy on home mortgage competition

Some Canadian banks say they're starting to question how aggressively they go after mortgage customers amid intense competition.

Some Canadian banks say they're starting to question how aggressively they go after mortgage customers amid intense competition.

Speaking at the Scotiabank Financials Summit on Wednesday, RBC chief executive Dave McKay said the bank is being more careful when making mortgage offers that wouldn't meet its threshold rate of return, or hurdle rate.

"We've been more careful in saying we won't chase hot money, where our customer's just shopping their mortgage at a below hurdle rate."

The hesitance comes as elevated interest rates have led to a slowdown in the housing market and slower growth in mortgages, meaning banks have to compete harder for business.

"They talk about Canada as being an oligopoly. It is a ruthless oligopoly, ruthlessly competitive," said McKay.

He said that while the U.S. banking industry was able to pass on its higher costs to borrowers, that isn't the case here.

"In Canada, we've absorbed them; we've competed them away and we've absorbed them into our margins through competition."