Mortgage Renewals in 2025–26 Could Hit Households Harder Than Expected — Here’s Why

With over 2.2 million Canadian mortgages set to renew between 2025 and 2026, many homeowners are bracing for a financial jolt. And with fixed rates still hovering above 5% in many provinces, the cost difference could be more than just sticker shock — it could reshape household budgets.

Recent analysis from major lenders shows that monthly payments on renewed mortgages could rise by $400–$900, depending on loan size, remaining amortization, and rate type.

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Why Is This Happening?

From 2020 to 2021, many Canadians secured ultra-low fixed or variable rates around 1.5% to 2.5%. Fast forward to 2025, and average fixed 5-year rates are now above 5%, with some lenders quoting even higher for uninsured borrowers.

Even if the Bank of Canada begins rate cuts later this year, they’re expected to be gradual, meaning anyone renewing in 2025 is unlikely to see pre-pandemic rate levels anytime soon.

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Who’s Most at Risk?

Mortgage holders in these situations may face the sharpest increases:

• Low initial rates (under 2.5%)
• High original loan amounts ($600K+)
• Short amortizations remaining (less room to stretch payments)
• Variable-rate holders on fixed payments who haven’t adjusted for interest hikes yet

For example:
If your original mortgage was $500,000 at 1.9% over 25 years, your payment was around $2,100/month.
At 5.3%, your renewed payment could exceed $2,900/month — a 38% jump.

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What Are the Options?

The good news? Lenders are becoming more proactive in helping clients prepare. If you’re facing a renewal:

• Start early: You can lock in rates up to 120 days in advance.
• Review amortization: Extending your amortization could help offset payment shock (but may cost more in the long run).
• Compare lenders: Loyalty isn’t always rewarded. Shopping around could save thousands.
• Consider prepayment options: If you can pay down a lump sum before renewal, you’ll owe less at the new rate.

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Mortgage.Expert Tip

Talk to a broker or advisor well before your renewal notice arrives. Even if rate cuts happen, renewal rates will likely stay above 4% for the rest of 2025 — and planning ahead can prevent a budget crisis.

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Final Word

Renewing your mortgage in 2025 may not be painless, but it doesn’t have to be disastrous. With early planning, rate shopping, and proper advice, you can soften the impact — and even come out ahead.