Why Canada’s reverse mortgage rates are falling

Reverse mortgage rates have fallen across Canada, but the latest cuts were not triggered by the Bank of Canada and were less directly tied to bond-market movements than conventional mortgage rates.

In late June, Equitable Bank lowered the 5-year fixed rate on its Flex Lite reverse mortgage from 6.44% to 6.23%. Days later, Bloom Financial cut the rate on its equivalent product from 6.59% to 6.33%. HomeEquity Bank followed, lowering its 5-year fixed reverse mortgage rate from 6.64% to 6.39%, while Home Trust lowered the 5-year fixed rate on its EquityAccess reverse mortgage to 6.23%.

The reductions were also reflected across shorter fixed terms and adjustable-rate products.

“What we are seeing across the Canadian landscape right now is a market shift brought about by a combination of changing market conditions and improved institutional funding costs,” Yvonne Ziomecki-Fisher, chief customer, brand and advice officer at HomeEquity Bank, said in a statement provided to Canadian Mortgage Trends.

“It’s created a unique window, and we are moving fast to pass those savings directly to homeowners.”

Ziomecki-Fisher said HomeEquity aims to help Canadians aged 55 and older remain in their homes as they age. “By moving quickly to adjust our rates downward, we are ensuring that unlocking home equity isn’t just a secure option, but an attractive, modern and highly accessible wealth-management solution for older Canadians looking to secure their financial independence.”

Canadian Mortgage Trends also contacted Equitable Bank, Home Trust and Bloom Financial, each of which declined to comment.

How reverse mortgage rates are set

Reverse mortgage rates do not necessarily track Government of Canada bond yields or Bank of Canada decisions as closely—or as quickly—as conventional mortgage rates.

Pricing also reflects each lender’s funding structure, hedging costs, capital requirements, expected loan duration and competitive strategy. Because borrowers generally do not make regular principal or interest payments, reverse mortgages also carry different duration and repayment risks than conventional mortgages. Those factors can make pricing changes less frequent and less uniform.

A stable interest-rate environment and lower market funding costs can still make it cheaper for lenders to finance their portfolios. However, brokers who spoke with CMT said competitive positioning appears to play an unusually large role in determining when reverse mortgage providers reprice.

“They’re not going to be so quick to make changes on their rates, because they don’t have to be,” said Tracy Valko of Valko Financial. “There are only four lenders and there isn’t huge competition, so if they’re all not moving their rate, then none of them has to.”

Before the latest round of reductions, none of Canada’s four reverse mortgage lenders had adjusted its rates since the fall, when each cut rates by similar amounts within a relatively short period.

A similar pattern occurred in March 2025, when the three reverse mortgage providers operating at the time lowered their rates to nearly identical levels within days of one another.

Ron Butler of Butler Mortgages said the small number of providers means a meaningful rate reduction by one lender can quickly force competitors to respond.

“If one decides, ‘I think I’m going to use a rate reduction as my edge and be a quarter of a percentage point lower than everybody else,’ the other players in the marketplace must match or exceed it,” he said.

Barring an economic shock that materially changes lenders’ funding costs, Butler expects reverse mortgage rates to decline gradually, with reductions largely driven by providers seeking a pricing advantage.

As awareness and use of reverse mortgages increase, he expects lenders to engage in a “slow crawl to the bottom at a very leisurely pace,” driven by periodic bouts of price competition.

Not your parents’ reverse mortgage market

The competition now putting occasional downward pressure on reverse mortgage rates is relatively new, reflecting growth in both demand and the number of providers.

The Canadian Home Income Plan introduced the country’s first reverse mortgage in 1986 and is now offered exclusively through HomeEquity Bank. It remained Canada’s sole reverse mortgage provider until Equitable Bank entered the market in 2018. Bloom Financial followed in 2021, while Home Trust launched its EquityAccess reverse mortgage in October 2025.

“When I first got into the business 31 years ago, everybody said, ‘This is going to be a real growth product,’ and then nothing happened,” Butler said. “It took the boomers getting older for it to go from a very niche, tiny product to the $11 billion in outstanding balances we have today.”

Demand has grown alongside greater awareness of the product and the aging of Canada’s population. According to Statistics Canada, 19.5% of the population was aged 65 or older as of July 1, 2025.

“Now that we’ve got four lenders, there’s going to be more competition,” Valko said. “The reverse mortgage lenders are now calling us with rate specials, and we never had that before.”

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