Definition
The loyalty premium (sometimes called "loyalty tax" or "inertia premium" in anglo-Canadian literature) refers to the surcharge paid by borrowers who renew their mortgage with the same lender without shopping competition.
Studies cited by the AMF and Bank of Canada: between 60% and 70% of Canadian borrowers accept the first renewal offer received by mail, while a transfer to another lender via a broker typically saves 20 to 50 bps (on a CA$300,000 balance: CA$600 to CA$1,500 per year).
Lenders rely on this inertia to recoup the margin given up at origination (when you were a new client to win). This is why the renewal market is more profitable than origination for the Big 6 — and why a mortgage broker often pays for itself 4-6 months before maturity.