Mortgage Renewals in 2025: Why Many Canadians Are Facing Sticker Shock

As the 5-year mortgage terms signed in 2020 come up for renewal this year, thousands of Canadian homeowners are facing significantly higher monthly payments than they originally budgeted for. The culprit? Soaring interest rates and inflation-driven economic shifts.

According to recent broker data, Canadians renewing fixed-rate mortgages in 2025 are seeing average interest rates between 4.8% and 5.5%, compared to rates as low as 1.89% in 2020. That jump is translating into hundreds of extra dollars in monthly costs.

“According to recent studies, over 60% of mortgage holders may see payment jumps by renewal time.”

A 2020 Mortgage Isn’t a 2025 Mortgage

Take a homeowner who purchased a $600,000 home in Ontario in 2020 with a 20% down payment and a 5-year fixed rate of 1.89%. Their original monthly payment was approximately $2,000. Now, at renewal in 2025, even with the same amortization period, they could be looking at a payment closer to $2,800 at a 5.2% rate.

The situation is prompting many to consider alternatives like extending amortization, switching to a variable rate, or refinancing with a new lender entirely.

“Many Canadians are already bracing for renewal sticker shock, as BoC forecasts suggest double-digit payment increases.” BoC forecasts

Renewal Options and What to Watch For

While banks typically send out renewal offers 30-90 days in advance, those rates are rarely the most competitive. Experts recommend that borrowers shop around or consult with a broker at least 4 months before renewal.

Some lenders are also being more flexible in 2025, offering options like interest-only payments or blended-and-extend terms to help reduce immediate financial strain.

Who’s at Highest Risk?

Homeowners in high-priced markets like Vancouver and Toronto are facing the biggest jump in monthly costs. First-time buyers from 2020 who took the longest amortizations and lowest rates are especially vulnerable.

There’s also growing concern about payment shock triggering more late payments or even delinquencies in 2025, especially if rates remain above 5%.