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The final wave of pandemic-era mortgage renewals is approaching, marking the end of an era of record-low borrowing costs. While mortgage rates have come down from the highs seen in 2023, many homeowners renewing today will still face higher monthly payments than they did when they first locked in their mortgage. It is no surprise that, for some, renewal is bringing a renewed sense of financial uncertainty.
According to a recent Royal LePage survey, conducted by Burson,1 38% of Canadians with a mortgage on their primary residence expect their monthly mortgage payment to increase upon renewal, with 26% anticipating a slight increase and 12% expecting a significant jump. While many borrowers anticipate higher costs at renewal, concerns have eased since early 2025, when a majority of renewing mortgage holders (57%) expected their monthly payments to rise.2Nationwide, 31% of respondents today expect their mortgage payments to stay approximately the same, while 17% expect their payment to decrease.
Homeowners who last renewed their mortgage when interest rates were at historic lows are the most likely to expect an increase in their monthly payment at their next renewal. The Bank of Canada’s overnight lending rate stood at just 0.25% in 2021 before rising to 4.25% by the end of 2022.
“The pandemic-triggered era of ultra-low rates came to an abrupt halt in early 2022, having lasted less than two years. While many Canadians who secured record-low mortgages during this period have already navigated their renewals, the final major group of rock-bottom rate holders are up for renewal, and understandably, they are concerned,” said Phil Soper, president and CEO, Royal LePage.
“What we are finding in practice is that families are managing the transition. Borrowing rates have retreated significantly from their post-pandemic peaks, while salaries and wages have continued to appreciate. While some households are adjusting discretionary spending to accommodate higher monthly mortgage payments, the widespread default crisis many feared simply hasn’t materialised – a testament in large part to Canada’s prudent lending standards.”
Despite stress test buffer, renewal anxiety lingers
When asked how they feel about their upcoming mortgage renewal compared to their previous renewal, 43% of respondents say they feel about the same as last time; approximately one third (35%) say they feel more anxious. Anxiety is highest among homeowners who last renewed their mortgage in 2021 or 2022.
“Anxiety is concentrated right where you would expect it, among homeowners who bought or refinanced when the overnight rate sat at 0.25%,” said Soper. “Logically, no one expected rates to stay that low forever, but knowing a rate hike is coming intellectually and seeing the actual monthly dollar increase on paper are two very different things. Importantly, the vast majority of these 2021 borrowers were stress-tested at rates near 5% or higher. They are moving into a rate environment they have already proven they can handle.”
Under federal mortgage qualification rules, borrowers must demonstrate they can afford payments at a rate higher than the one they are offered by their lender. Today, buyers must qualify at the greater of their contract rate plus two percentage points or 5.25%. As a result, homeowners who purchased in 2021 were required to qualify at a minimum rate of 5.25%,3 which is higher than most five-year fixed rates available today.
Higher costs fail to prompt mortgage renewal cliff
Most homeowners have no plans to change their living arrangements despite the prospect of higher mortgage payments. When asked whether they are considering making a change to reduce their housing costs at renewal, 71% of borrowers say they are not. Among the 22% who are considering a change, 7% are looking at relocating to a more affordable region, while 5% are considering renting out part of their home to offset mortgage costs. Another 5% say they are considering downsizing.
“Most homeowners facing renewal are deciding how to fit a higher payment into their budget, not whether they can afford to keep their home,” concluded Soper. “Home ownership remains a deeply held priority for Canadians, and as this final group of pandemic-era mortgages renews, we see no evidence this is changing.”
Further highlights from the release:
- 76% of respondents who expect their mortgage payment to increase say it will put pressure on their household finances.
- 70% of mortgage holders currently have a fixed-rate mortgage, while 29% have a variable-rate mortgage
- Saskatchewan and Manitoba have the highest share of respondents expecting an increase in their monthly mortgage payment at renewal.
- 45% of respondents in Vancouver and 39% in Toronto say they feel more anxious than they did at their previous renewal; higher than the national average (35%).