More than 1 in 10 Canadian mortgage holders who locked in historically low rates during the pandemic are soon facing renewal, with many likely to face higher borrowing costs and 35 percent saying they are more anxious about their upcoming renewal than their previous one, according to a new report.
The Aug. 19 report from real estate franchiser Royal LePage cites its survey, conducted by Burson, which found that 38 percent of Canadians with a mortgage on their primary residence expect there to be an increase in their monthly payments on their next renewal.
The 38 percent includes 26 percent who expect a slight increase and 12 percent who expect a significant increase when they next renew. A further 31 percent expect their payments to stay roughly the same, and 17 percent anticipate paying less. The report does not specify the responses of the remaining 14 percent.
The figures represent a decline from early 2025, when 57 percent of Canadian mortgage holders facing upcoming renewal said they expected an increase.
Many of the borrowers facing a mortgage renewal in the coming year obtained or renewed their mortgages in 2021, when the Bank of Canada’s overnight lending rate had been at 0.25 percent since March 2020, while today’s rate stands at 2.25 percent. The share of Canadian homeowners who got or refinanced their mortgage during the record lows account for roughly 12 percent of all outstanding mortgages in Canada, according to Royal LePage.
“The pandemic-triggered era of ultra-low rates came to an abrupt halt in early 2022, having lasted less than two years,” President and CEO of Royal LePage Phil Soper said.
“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.”
The Bank of Canada’s overnight rate was at a historic low of 0.25 percent from March 2020 to March 2022, with the stated goal of providing a safeguard for the economy during the disruption caused by COVID.
Five-year fixed rates of 1.39 percent were available from January through March 2021, while variable rates as low as 0.85 percent were offered from November 2021 through January 2022. Soper said those who took on or refinanced mortgages during this period of historic lows in 2021 and 2022 exhibited much of the strongest anxiety in Burson’s poll.
“Anxiety is concentrated right where you would expect it, among homeowners who bought or refinanced when the overnight rate sat at 0.25 per cent,” Soper said.
“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.”
‘Prudent Lending Standards’
Federal rules that determine who qualifies for a mortgage require potential borrowers to prove they can afford payments at a higher rate than that being offered by their lender, commonly known as a mortgage stress test.
Under current stress test rules, potential borrowers must qualify at their contract rate plus 2 percent, or 5.25 percent, tested by whichever adds up to a higher percentage.
Soper said that despite looming anxiety regarding upcoming renewals, the “vast majority” of 2021 borrowers were stress-tested at rates of near 5 percent or more and “are moving into a rate environment they have already proven they can handle.”
He added that while higher payments have forced some households to reduce spending, fears of widespread mortgage defaults have not materialized, something he credits “in large part to Canada’s prudent lending standards.”
Regional Differences
The Royal LePage report noted regional differences in survey responses, with respondents in Manitoba and Saskatchewan the most likely to expect a higher monthly payment when they renew their mortgages at 43 percent, compared to respondents in Alberta being the least likely at 29 percent.
The responses are “broadly aligned” in the rest of Canada, the report states, with 37 percent of respondents in British Columbia and 39 percent in Ontario, Quebec, and Atlantic Canada expecting an increase in their monthly payments.
The report also notes that respondents to the Burson survey expressed particular anxiety in some of Canada’s highest-priced housing markets, with 45 percent of Vancouver respondents saying they are more concerned about their next mortgage renewal than their last one, along with 39 percent of Toronto respondents, 34 percent of Montreal respondents, and 32 percent of Calgary respondents.
“Anxiety around mortgage renewals tends to be greater in British Columbia because outstanding mortgage balances are often much larger,” Royal LePage sales representative Adil Dinani said.
“The same increase in interest rates that adds a few hundred dollars to a monthly payment in other parts of the country can have a much greater impact in Metro Vancouver,” he added.
Most homeowners facing higher costs are looking for ways to stay in their homes rather than sell, according to Dinani.
“When payments put pressure on the household budget, many are exploring practical options, whether that is generating rental income, adjusting spending, or in some cases selling an investment property,” he said. “People are adapting to changing conditions rather than making rushed decisions.”
