Mortgage renewal shock looming
About 60% of mortgages are set to renew in 2025–26, exposing many borrowers to steep payment jumps—five‑year fixed holders face roughly +20% payment increases and variable borrowers up to +40%, reported. Current social‑tracked averages show five‑year fixed rates near ~4.36% and variables around ~3.99%—numbers that help explain the renewal squeeze, reported.
CMHC counts roughly 1.2 million fixed‑rate mortgages scheduled to renew in 2025 and another ~980,000 in 2026, representing over $300 billion of exposure and with more than 85% of those contracts originated when the Bank’s policy rate was at or below 1% CMHC [release cmhc-schl.gc.ca]. Bank of Canada staff project average monthly mortgage payments could be about 10% higher for 2025 renewals and 6% higher for 2026 renewals, while five‑year fixed holders face typical payment increases around 15%–20% and variable‑rate/variable‑payment borrowers could see average declines near 5%–7% under market‑expectations assumptions Bank of Canada staff [note bankofcanada.ca]. Five‑year Government of Canada benchmark yields have been trading near roughly 2.8%–3.0% in early March 2026, a move that pushes wholesale term pricing higher and feeds into fixed‑rate offers Canada 5‑year yield [data tradingeconomics.com]; retail special‑offer five‑year fixed rates are as low as about 3.79% and best five‑year variable promos near 3.35% in secondary channels, widening the gap with posted conventional rates that sit above 6.00% at major banks Ratehub special [rates ratehub.ca] Bank of Canada posted rates [table bankofcanada.ca]. The Bank of Canada’s policy rate was held at 2.25% on January 28, 2026 in its latest decision Bank of Canada press release Jan 28, [2026 bankofcanada.ca], and Reuters polling alongside the BoC’s own shadow‑council commentary showed market economists largely priced for a year‑long hold into late‑2026 as of early March 2026 Reuters [poll msn.com] shadow‑council [summary mpamag.com]. MLS® home sales weakened, falling 5.8% month‑over‑month in January 2026, while the MLS® Home Price Index remained below year‑ago levels (about 4.9% lower as of the most recent January release), a demand softening that offsets some refinancing strain for lenders in tighter markets CREA monthly [release creastats.crea.ca] MLS HPI [update deeded.ca]. Bank staff construct their renewal scenarios assuming borrowers renew into the same product and that mortgage spreads stay constant, meaning the scale of borrower payment shock in practice will hinge on whether lenders preserve, widen or compress spreads and on how many borrowers switch product types at renewal Bank of Canada methodology [note bankofcanada.ca]; retail evidence of aggressive promotional pricing from non‑bank channels (best‑offer five‑year fixed ≈3.79%) shows competitive tactics already influencing net outcomes for renewing borrowers Ratehub best [offers ratehub.ca].
