Approximately 1.2 million mortgages will renew in 2025, a vast majority (85%) of which were secured when the Bank of Canada’s key lending rate was at or below one per cent. Since June 2024, interest rates have trended down from their two-decade high, yet remain above the historically low levels seen during the pandemic. As a result, hundreds of thousands of homeowners will likely renew their mortgage this year at a higher rate.
According to a recent Royal LePage survey, conducted by Hill & Knowlton, more than half (57%) of Canadians who are renewing the mortgage on their primary residence in 2025 expect their monthly mortgage payment to increase upon renewal (35% expect it to increase slightly and 22% expect it to increase significantly). Meanwhile, 25 per cent say their monthly mortgage payment will remain about the same – within $100 of their current payment amount – and another 15 per cent expect their monthly payment to decrease upon renewal.
“When it comes to post-pandemic mortgage renewals, many Canadians have avoided the worst-case scenario of having to sell their homes due to the inability to cover the cost of their mortgage, thanks to solid employment trends and declining interest rates,” said Phil Soper, president and CEO, Royal LePage. “Nevertheless, some will face a substantial rise in their mortgage costs, putting added pressure on their household finances. Many in this situation are exploring options to lower their monthly fees, such as extending their amortization period; a tactic which has proven popular.”
Of those who expect their monthly mortgage payment to rise upon renewal, 81 per cent say the increase will put financial strain on their household; 47 per cent expect a slight strain, while 34 per cent expect a significant strain. Among them, 60 per cent of respondents say they will reduce or eliminate discretionary spending to help cope with the impact of increased monthly mortgage payments; 43 per cent say they will reduce or eliminate travel; 36 per cent say they will reduce or eliminate saving or investing; 34 per cent say they will reduce spending on essentials, such as gas and groceries; and 23 per cent say they will obtain a second job or find another source of income. Respondents were able to select more than one answer.
“Even in challenging financial times, Canadians continue to prioritize home ownership and paying down their mortgages – cutting back on other spending, and even savings, if absolutely necessary,” said Soper. “Delinquency rates in Canada remain extremely low, arguably the lowest among advanced economies worldwide, despite the rising cost of living and household debt. For example, the rate of mortgage default in the U.S. is more than fifteen times higher.
“With so many homeowners set to renew their mortgages at higher rates in 2025, many are already preparing to tighten their budgets, redirecting funds from savings, hobbies or vacations to ensure they can meet their mortgage obligations.”
According to the Canada Mortgage and Housing Corporation (CMHC), the mortgage delinquency rate rose to 0.20 per cent in the third quarter of 2024, but remains well below pre-pandemic levels and historical averages.
Though many Canadians will see their monthly mortgage payment rise this year, most see no reason to make preemptive major lifestyle changes to cope with increased housing expenses. A majority (62%) of respondents say they will not change their living arrangements to avoid potentially higher monthly mortgage costs. Respondents in Quebec were the most likely to say they will not adjust their living arrangements (78%), while those in Alberta were the least likely to say so (53%). Nationally, however, 11 per cent say they are considering relocating to a more affordable region; 10 per cent say they are considering downsizing; and 10 per cent say they are considering renting out a portion of their home to subsidize expenses. Respondents were able to select more than one answer.
Popularity of variable-rate loans rises as borrowing costs fall
With interest rates on a downward trajectory, variable-rate mortgages are gaining in popularity. According to the survey, 66 per cent of Canadians with a mortgage renewing this year say they plan to obtain a fixed-rate loan upon renewal (down from the 75% who currently hold fixed-rate mortgages), and 29 per cent say they will choose a variable-rate loan (up from the 24% who currently hold variable-rate mortgages).
While most Canadians with pending renewals in 2025 plan to stick with the same type of mortgage product they currently have, a sizable shift toward variable-rate loans has emerged. Of those who currently have a fixed-rate mortgage renewing this year – the most popular mortgage product overall in Canada – 20 per cent say they will switch to a variable-rate loan. Seventy-six per cent say they intend to renew with another fixed-rate loan. Meanwhile, 61 per cent of current variable-rate mortgage holders intend to renew with another variable-rate loan, and 37 per cent say they will switch to a fixed rate.
More than one third (37%) of all respondents say they plan to obtain a five-year mortgage term upon renewal, followed by 19 per cent who plan to sign on to a three-year term. Eighty-six per cent of respondents who will renew their mortgage in 2025 currently use a prime lender.
“Since last summer, the Bank of Canada has made several cuts to its overnight lending rate amounting to a decline of 200 basis points thus far, driving variable mortgage rates down in tandem. For homeowners looking to reduce their monthly payments or pay down their principal faster, variable-rate mortgages have become an increasingly attractive option in light of today’s declining rate environment and the likelihood of further cuts this year,” added Soper. “Ultimately, Canadians should choose the mortgage product that best suits their financial goals and risk tolerance.”
In November 2024, the Office of the Superintendent of Financial Institutions (OSFI) moved to eliminate the mortgage stress test for uninsured borrowers planning to switch lenders upon renewal, so long as the amortization schedule and loan amount remain unchanged.4 This offers mortgagees the opportunity to explore financing options when renewing their loans.
Prairie homeowners most concerned about financial pressure from higher payments
Respondents across Canada show notable differences in the anticipated impacts of a mortgage renewal on their household.
Respondents in the province of Quebec are the least likely to expect their monthly mortgage payment to increase (51%), and the least likely to anticipate financial strain (73%) as a result. Conversely, Saskatchewan and Manitoba respondents are among the most likely to expect increased payments (63%) – alongside Atlantic Canada (64%) – and the most likely to anticipate financial strain (89%), likely due to income instability in resource-based industries. While Alberta respondents also report a high likelihood of financial strain due to increased payments (86%), some homeowners plan to mitigate the financial impact by downsizing or relocating.
Key lending rate trajectory uncertain amid tariff tit-for-tat
Escalating political turmoil at the hands of the newly-elected U.S. President Donald Trump has the world on the edge of its seat, including Canada. Tariff disputes between the two countries threaten to disrupt our nation’s economy, adding inflationary pressure, driving up the cost of imported goods, and causing the Canadian dollar to weaken. Further, recently-announced tariffs on steel and aluminum will have a severe impact on the housing construction industry.
“The increased cost of building materials puts the construction industry as a whole – and desperately-needed new housing developments – at risk. Fewer projects will make it off the blueprint, be they delayed or cancelled entirely. And, higher costs will eventually trickle down to the end-user.”
In its first policy rate announcement of 2025, the Bank of Canada signaled a shift, noting it would prioritize economic growth over inflation control in response to rising trade tensions. In the short-term, this could lead to more aggressive cuts to the overnight lending rate if the central bank deems it necessary to shield the Canadian economy from the fallout of an unprecedented trade dispute.
“While a trade war with our southern neighbour offers little economic benefit, new homebuyers and those renewing a mortgage this year may find a silver lining: lower borrowing rates. If the Bank of Canada is forced to take measures to bolster a weakening economy, we could see faster and deeper rate cuts, at least in the short term,” said Soper.
Royal LePage 2025 Mortgage Renewal Survey – Data Chart:
rlp.ca/table-2025-mortgage-renewal-survey
REGIONAL SUMMARIES
ONTARIO
In the province of Ontario, 58 per cent of homeowners whose mortgages are renewing in 2025 expect their monthly mortgage payment to increase upon renewal (35% expect it to increase slightly and 23% expect it to increase significantly).
Of those who expect their monthly mortgage payment to rise upon renewal, 81 per cent say the increase will put financial strain on their household. Among them, 55 per cent of respondents say they will reduce or eliminate discretionary spending to help cope with the impact of increased monthly mortgage payments; 46 per cent say they will reduce or eliminate travel; and 39 per cent say they will reduce or eliminate saving or investing. Respondents were able to select more than one answer.
“When faced with higher mortgage payments at renewal, homeowners typically fall into two categories: those with primary residences, who adjust their budgets and make financial sacrifices to absorb the increased costs, and investors, who take a business-minded approach and are willing to sell a real estate asset if rising monthly expenses cut too deeply into their returns,” said Tom Storey, sales representative and head of The Storey Team, Royal LePage Signature Realty in Toronto. “Some mortgage holders with higher renewal rates will need to make lifestyle adjustments, such as cutting back on travel or dining out, while others may need to take more drastic measures, like extending their amortization period to its original term, to reduce their monthly payments and manage the increased costs.”
Storey noted that many move-up buyers are strategically timing their next home purchase around their upcoming renewal, weighing whether to wait out their current mortgage term before upsizing or renew early.
According to the survey, 71 per cent of Ontarians with a mortgage renewing this year currently hold a fixed-rate mortgage, while 27 per cent have a variable rate. When asked what type of mortgage they plan to obtain upon renewal, 64 per cent say they will opt for a fixed-rate loan, while 31 per cent say they will choose a variable-rate mortgage. Respondents in this region were among the most likely to say they plan to obtain a variable-rate mortgage upon renewal. Thirty-six per cent of all respondents in the province say they plan to obtain a five-year mortgage term upon renewal, followed by 19 per cent who plan to sign on to a three-year term.
“Fixed-rate mortgages have historically been the most popular option among Canadians, and as their loans come up for renewal, I expect many will make the same choice. This product has provided financial stability during the rate rollercoaster of the past few years. First-time buyers, however, tend to be the ones opting for variable-rate loans today, prioritizing affordability over predictability,” said Storey. “When you receive a mortgage renewal notice from your lender, it’s best not to accept the first offer outright. Instead, explore alternative payment plans and compare options from different financial institutions to secure the best deal. With stress testing no longer required for uninsured borrowers switching lenders at renewal, Canadians now have more flexibility.”
Additional data for the province of Ontario, the city of Toronto and the Ottawa/Gatineau region is available in the table linked below.
Royal LePage 2025 Mortgage Renewal Survey – Data Chart:
rlp.ca/table-2025-mortgage-renewal-survey