Key Highlights:

• 40% of Canadians whose mortgage is renewing in 2025 expect their payment will stay the same or decrease, while 57% anticipate their monthly payment will increase.

• 81% of those who expect their monthly payment to increase upon renewal, say it will put financial strain on their household.

• 10% of Canadians with a mortgage renewing in 2025 are exploring downsizing, relocating and rental income options.

• As interest rates continue to decline, more Canadians are looking to sign variable-rate mortgages upon renewal.

• More aggressive rate cuts by the Bank of Canada are possible to stave off a potential recession as the trade conflict between the United States and Canada intensifies.

Approximately 1.2 million mortgages will renew in 2025, 85% of which were secured when the Bank of Canada’s key lending rate was at or below one%. Although interest rates have trended down from their two-decade high since June 2024, they remain above the historically low levels seen during the pandemic. As a result, hundreds of thousands of homeowners will likely renew their mortgage in 2025 at a higher rate.

According to a recent Royal LePage survey, conducted by Hill & Knowlton, 57% of Canadians who are renewing their primary residence mortgage in 2025 expect their monthly mortgage payment to increase upon renewal (35% expect it to increase slightly and 22% expect it to increase significantly), 25% say their monthly mortgage payment will remain about the same (within $100 of their current payment amount) and another 15% expect their monthly payment to decrease upon renewal.

Phil Soper, president and CEO, Royal LePage states, “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. … 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% say the increase will put financial strain on their household: 47% expect a slight strain, while 34% expect a significant strain. Among them, 60% of respondents say they will reduce or eliminate discretionary spending to help cope with the impact of increased monthly mortgage payments: 43% say they will reduce or eliminate travel, 36% say they will reduce or eliminate saving or investing, 34% say they will reduce spending on essentials such as gas and groceries, and 23% 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,” states 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% 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. 62% of respondents say they will not change their living arrangements to avoid potentially higher monthly mortgage costs. Nationally, 11% say they are considering relocating to a more affordable region, 10% say they are considering downsizing, and 10% say they are considering renting out a portion of their home to subsidize expenses. Respondents were able to select more than one answer.

BRITISH COLUMBIA

53% of homeowners in British Columbia whose mortgages are renewing in 2025 expect their monthly mortgage payment to increase upon renewal - 33% expect it to increase slightly and 20% expect it to increase significantly.

Of those who expect their monthly mortgage payment to rise upon renewal, 82% say the increase will put financial strain on their household - 60% say they will reduce or eliminate discretionary spending to help cope with the impact of increased monthly mortgage payments, 42% say they will reduce or eliminate travel, and 37% say they will reduce or eliminate saving or investing. Respondents were able to select more than one answer.

Adil Dinani, sales representative and team lead of the Dinani Group, Royal LePage West Real Estate Services in Greater Vancouver states, “With interest rates trending lower in recent months, some homeowners with upcoming renewals are breathing a sigh of relief. As the prime lending rate offered by Canada’s major financial institutions has declined, the impact of higher renewal payments has been less severe. … Though it has taken time, most consumers have accepted the reality of today’s higher borrowing costs and are preparing for any renewal increases that may come their way. Clients are exploring all their options, especially since new lending rules eliminate stress testing for uninsured borrowers switching lenders.”

Dinani noted that some homebuyers who were previously sidelined by higher borrowing costs – particularly move-up purchasers locked into favourable rates – are gradually returning to the market as rates have continued to come down.

According to the survey, 74% of British Columbians with a mortgage renewing this year currently hold a fixed-rate mortgage, while 25% have a variable rate. When asked what type of mortgage they plan to obtain upon renewal, 67% say they will opt for a fixed-rate loan, while 29% say they will choose a variable-rate mortgage. 41% of all respondents in the province say they plan to obtain a 5-year mortgage term upon renewal, followed by 18% who plan to sign on to a 3-year term.

“Consumer confidence has improved as interest rates have declined, but it remains fragile. Economic uncertainty, driven mostly by international trade conflicts, is causing concern among buyers and sellers alike. As a result, many homeowners continue to choose the stability of a fixed-rate mortgage, while others look to take advantage of monthly savings currently offered by variable rates,” states Dinani. “While it may be tempting to try and predict where rates are headed, it’s not advisable. Instead, selecting a mortgage product that aligns with your risk tolerance and financial capacity is the best approach.”

View the Full Royal LePage Press Release

View the Full Royal LePage 2025 Mortgage Renewal Survey – Data Chart