BoC Forecast: Mortgage Renewals in 2025 Could Increase Payments by 10%

Canada — July 21, 2025. A new analytical note from the Bank of Canada warns that homeowners with mortgages up for renewal in the next six months could face monthly payment increases of up to 10%, even under conservative market conditions.
According to the Bank’s internal forecasting models, this hike will affect a large group of borrowers who locked into ultra-low rates during 2020–21. As those 5-year fixed terms expire, many are now facing much higher renewal rates—even with expected cuts later in 2025.

What the BoC’s Note Says

The staff note (released July 20) outlines that rising borrowing costs are still working their way through the system, and the “true impact of rate hikes” will hit many households at renewal.

Key Estimate: Borrowers renewing before January 2026 will see 10% or more increase in their monthly mortgage payments compared to their current costs.

The biggest increases are expected among fixed-rate borrowers in urban centres like Toronto, Vancouver, and Ottawa, where mortgage balances are typically higher.

What Experts Say

Economist Craig Alexander explains:

“It’s not about defaults—it’s about affordability pressure. Many homeowners will tighten budgets, cut non-essential spending, or extend amortization terms.”

This may not create a financial crisis, he says, but it will “absolutely affect household cash flow, consumption habits, and financial stress levels.”

“This forecast underscores growing concerns over mortgage renewal affordability. Learn why Canadians are feeling the pressure

Who’s Affected the Most?

• 5-year fixed rate holders from 2020–21
• Households with large principal balances
• Homeowners who selected short amortizations in hopes of quick equity growth

What Can You Do?

Mortgage advisors are recommending proactive steps:

• Start budgeting now
• Explore blended mortgage options
• Consider extending amortization during renewal
• Compare offers from multiple lenders, not just your current one

For a deeper look at how these projections could impact Canadian households, read our detailed report:
BoC Warns Majority Face Payment Hike at Renewal.