YOUR HOME SOLD GUARANTEED OR WE'LL BUY IT!*
A significant mortgage renewal wave is on the horizon, with TD Economics estimating that 60 per cent of outstanding mortgages will renew by the end of 2026. Of these, 40 per cent are expected to renew at higher rates, presenting financial challenges for many households. The peak of these renewals is anticipated between late 2025 and early 2026. Households falling into this 40 per cent bracket are the most vulnerable to increased mortgage payments, potentially straining their monthly budgets and overall financial flexibility.
For example, a homeowner who secured a $500,000 five-year fixed-rate mortgage at 2.5 per cent in 2020 will likely face renewal at around four per cent. This would result in an additional $320 in monthly payments. However, not all borrowers will be affected the same way. Some mortgage holders — particularly those with short-term or variable-rate mortgages — may actually benefit from the current trend of declining interest rates. These borrowers, part of what TD calls the “early relief group,” often carry larger balances but may experience substantial drops in their mortgage payments upon renewal.
Others who entered the housing market during periods of rising interest rates could see mixed outcomes. Their new rates will depend heavily on the timing of their renewal and their original mortgage rate. While the overall mortgage renewal wave has been described as a potential “shock,” much of the sting has lessened. Financial conditions for many homeowners have improved since 2020, and home equity has increased, partly due to a 25 per cent rise in the national home price index. This gives some borrowers the option to refinance, extend amortizations, or prepay to ease the impact.
Still, economic stress will persist for some, particularly those facing job losses or reduced incomes. TD Economics anticipates the unemployment rate may rise to 7.3 per cent by the end of the year, which will coincide with the heaviest mortgage renewal period. Despite this, Solovieva remains cautiously optimistic, noting that the overall mortgage burden across the country is starting to ease. With mortgage-service costs expected to trend downward into 2026 — though still above pre-pandemic levels — many Canadians may find they have the resources and strategies to weather this transition.
For example, a homeowner who secured a $500,000 five-year fixed-rate mortgage at 2.5 per cent in 2020 will likely face renewal at around four per cent. This would result in an additional $320 in monthly payments. However, not all borrowers will be affected the same way. Some mortgage holders — particularly those with short-term or variable-rate mortgages — may actually benefit from the current trend of declining interest rates. These borrowers, part of what TD calls the “early relief group,” often carry larger balances but may experience substantial drops in their mortgage payments upon renewal.
Others who entered the housing market during periods of rising interest rates could see mixed outcomes. Their new rates will depend heavily on the timing of their renewal and their original mortgage rate. While the overall mortgage renewal wave has been described as a potential “shock,” much of the sting has lessened. Financial conditions for many homeowners have improved since 2020, and home equity has increased, partly due to a 25 per cent rise in the national home price index. This gives some borrowers the option to refinance, extend amortizations, or prepay to ease the impact.
Still, economic stress will persist for some, particularly those facing job losses or reduced incomes. TD Economics anticipates the unemployment rate may rise to 7.3 per cent by the end of the year, which will coincide with the heaviest mortgage renewal period. Despite this, Solovieva remains cautiously optimistic, noting that the overall mortgage burden across the country is starting to ease. With mortgage-service costs expected to trend downward into 2026 — though still above pre-pandemic levels — many Canadians may find they have the resources and strategies to weather this transition.
We would like to hear from you! If you have any questions, please do not hesitate to contact us. We are always looking forward to hearing from you! We will do our best to reply to you within 24 hours !