Almost 1.2 million fixed-rate mortgages are up for renewal in 2025 (according to the Canada Mortgage Housing Corporation) — 85% of which were signed when the Bank of Canada’s benchmark interest rate was at or below 1%.
Over half of Canadians renewing their mortgages in 2025 expect their monthly payments to increase (Royal LePage). The majority of those expecting an increase expressed this will add financial strain on their households.
Leger Opinion also conducted a survey of 1,340 Canadians set to renew their mortgages this year. 57% expect their monthly payments to jump up upon renewal. Of that 57%, 81% also stated the extra cost will place financial pressure on their households.
Slicing & dicing rates
The Bank of Canada has introduced a sequence of rate cuts that reduced the policy interest rate from its peak at 5% to 3% as of January 29th, 2025, lowering the rate by 0.25%.
Fixed mortgage rates are also dipping, with five-year fixed rates dropping over 1% since peaking in November 2023. At this time, these rates float around 4% at some brokerages.
“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,” Phil Soper, Royal LePage’s president and CEO, said in a statement.
“Nevertheless, some will face a substantial rise in their mortgage costs, putting added pressure on their household finances,” he added.
Prioritizing stressors
Interest rate reductions have alleviated borrower stress. At the same time, housing affordability is a pressing concern.
The Bank of Canada emphasizes that changes to mortgage structures alone will not resolve affordability issues and advocates for a balanced approach between housing supply and demand.
While the BoC boosted interest rates in response to higher inflation, the central bank has been cutting benchmark rates. This has takes some pressure of those preparing for renewal.
To navigate this, Canadian families plan to further decrease discretionary spending, travel and vacation less.
Do you know anyone renewing in 2025? For more on this topic, click here.
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