A significant number of Canadian homeowners are approaching mortgage renewals in 2025. Some 1.2 million mortgages are set to renew this year, with a vast majority, around 85%, originally secured when the Bank of Canada's key lending rate was at or below one percent. Needless to say, most of these mortgage holders find themselves in the grips of caution and concern. Given the current higher interest rate environment, many homeowners are preparing for increased monthly payments, but broader economic trends and policy measures could help mitigate financial strain.A recent Royal LePage survey indicates that 57% of those renewing their mortgages in 2025 expect an increase in their monthly payments. Of these, 22% anticipate a significant rise, while 35% foresee a slight uptick. The expectation of higher payments stems from the fact that many of these mortgages were secured at historically low rates, and despite recent rate cuts, borrowing costs remain above pandemic-era lows.The Bank of Canada (BoC) has been proactive in addressing economic challenges, particularly the escalating trade tensions with the United States. In response to potential tariffs, BoC Governor Tiff Macklem has suggested that further interest rate cuts could be implemented to support the Canadian economy. This approach aims to counteract the adverse effects of trade disputes and provide relief to borrowers facing higher mortgage payments.Inflation remains a key factor influencing monetary policy. As of January, Canada's annual inflation rate edged up to 1.9%, primarily due to increased gasoline and natural gas costs. However, this figure remains within the BoC's target range, suggesting a stable economic environment. The central bank’s commitment to maintaining inflation around 2% provides a backdrop for potential interest rate adjustments, which could benefit homeowners during mortgage renewals.Financial institutions are also adjusting their forecasts in light of current events. The Bank of Montreal (BMO) has projected that, should U.S. tariffs be imposed, the BoC might reduce its policy rate to 1.50% by the end of the year. Such a reduction would significantly lower borrowing costs, offering potential relief to homeowners renewing at higher rates.The prospect of increased payments is causing concern among homeowners. The Royal LePage survey indicates that 81% of those expecting higher payments believe it will strain their household finances. In response, many are considering measures such as reducing discretionary spending, cutting back on travel, or even obtaining additional employment to manage the increased costs.As interest rates have begun to decline since mid-2024, there’s a notable shift in homeowner preferences towards variable-rate mortgages. Many borrowers are opting for shorter-term fixed-rate mortgages (1-3 years) or blended mortgage rates that combine their current rate with a new one to soften payment increases.Lenders are also adjusting their offerings to help borrowers manage renewal challenges. Some banks are introducing alternative solutions such as longer amortization periods (extending to 30 or even 35 years), which can lower monthly payments. Additionally, homeowners carrying high-interest debt are considering refinancing options, rolling credit card or personal loan balances into a lower-interest mortgage to reduce overall monthly payments despite a higher mortgage rate.The impact of mortgage renewals varies by region. Homeowners in Quebec, for instance, are less likely to anticipate increased payments and financial strain upon renewal, while those in Alberta and the Prairie provinces express greater concern. This disparity may be attributed to regional economic conditions and housing market dynamics.&nbsp;In British Columbia, particularly in Vancouver, high home prices mean even small rate increases can lead to significant payment hikes. However, strong housing demand and a resilient job market may help offset some of the financial strain for homeowners navigating renewals.While many Canadian homeowners anticipate higher mortgage payments upon renewal this year, the proactive stance of the Bank of Canada, stable inflation, and potential interest rate cuts offer some relief. Exploring refinancing options, adjusting mortgage terms, and staying informed about economic developments can help homeowners navigate this period strategically.As 2025 progresses, will the anticipated interest rate cuts be enough to ease the financial burden for homeowners, or will economic pressures continue to pose challenges? The coming months will provide more clarity on the direction of Canada’s housing market and the broader economy.

Mortgage Renewals in 2025: What Canadian Homeowners Can Expect

Many Canadian homeowners face mortgage renewals in 2025. From Ontario to British Columbia and beyond, explore market forecasts, lender strategies, and potential rate relief.

About RIFO

Business

Investors

News

Contact Us

Contact Us