I got a very good comment from someone who calls themselves Anon Banker, about the Tied Selling Banking Regulations and how that should stop banks from forcing you to have a chequing account with them if you have a mortgage with them. The Tied Selling regulation is quite clear about this:
For example, if you apply for a mortgage at a bank, the institution cannot make you buy another product or service as a condition for obtaining the mortgage.
Luckily for the banks there is a little wiggle room, with the following statement:
However, banks (and their affiliates) are allowed to offer consumers, in conjunction with one of their products, another product or service on more favourable terms than they normally would provide. This is similar to a company offering a deal or discount to its customers if they purchase more than one item from the company. For example, if you obtain a loan from a bank to purchase a Registered Retirement Savings Plan (RRSP) investment, the bank might offer you a better rate on your loan if you also purchase your RRSP investment from them.
Better Deals if You Get an Account?
So the bank can not deny your mortgage application if you decide not to have a bank account with them, however, they can offer you a better mortgage rate if you do open an account with you. I suppose that sounds fair.