Mortgage Renewal Wave: What 2025 and 2026 Actually Look Like

The numbers are not theoretical. A household that locked in a $600,000 mortgage at 1.8% in 2021 on a five-year fixed term faces a renewal rate in the 4.5–5.5% range depending on when they renew and what lenders offer. Monthly payments on a 25-year amortisation rise from approximately $2,490 to $3,300–$3,500. That is $800–$1,000 per month in additional housing costs, drawn directly from consumption spending.

Multiply this across hundreds of thousands of households and the macroeconomic drag becomes visible. TD Economics estimates the cumulative payment shock from mortgage renewals will subtract roughly 0.3–0.5 percentage points from GDP growth annually through 2026. That is a meaningful headwind in an economy growing at 1–1.5% in real terms.

Who Is Most Exposed?

The exposure is not uniform. First-time buyers who entered the market at peak prices in 2020–2022 are most vulnerable — they combined high purchase prices with low down payments and maximum amortisations. Investors who leveraged multiple properties on floating-rate financing have already absorbed significant pain. Long-term homeowners with substantial equity have buffer room to absorb higher payments or, if necessary, sell into a market where supply remains constrained.

The Lender’s Perspective

Canadian banks have been building mortgage loss provisions in anticipation of renewal stress. The Office of the Superintendent of Financial Institutions has tightened capital adequacy requirements for institutions with concentrated residential mortgage exposure. The financial system, in aggregate, can absorb this wave — but individual pockets of the borrower population cannot, and those defaults, even if small in absolute number, carry significant human cost.