Navigating Mortgage Renewals

August 2025 | Navigating Mortgage Renewals

From Rock-Bottom Rates to Today’s Reality

If you were lucky enough to secure a mortgage in the early days of 2020, chances are your rate was impressively low, often near 1% to 2%. At the time, the Bank of Canada’s overnight rate was a mere 0.25%, helping hundreds of thousands of Canadians secure historically cheap financing. Fast-forward to 2025, and things look dramatically different as these five-year terms come up for renewal.

Sticker Shock at Renewal

Many Canadians now face renewal rates around 4% or higher. The exact rate depends on the lender and whether the mortgage is insured. That’s more than double, even triple, the rates many homeowners are used to. It’s no surprise that early 60% of mortgage holders renewing in 2025 will see an increase in payments. Five-year, fixed-rate borrowers face the most dramatic jump.

A typical homeowner who borrowed $500,000 at 1.5% in 2020 might see their interest rate rise to 4.19%, boosting their monthly payment by hundreds of dollars. About 58% of Canadians say they’re concerned about making ends meet at renewal time. Many are already cutting back on discretionary spending to prepare.

Why It’s Not All Doom and Gloom

While a payment jump is tough to stomach, there are some silver linings. Many renewing borrowers have seen their incomes rise and paid down a chunk of their mortgage principal over the past five years, creating more flexibility. Lenders are also motivated for your business, so don’t be shy about shopping around and negotiating the best possible rate at renewal.

Practical Steps

If your renewal is coming up soon, give yourself plenty of time to review your options:

• • • Compare rates from multiple lenders and brokers.
    • Consider your budget and whether a shorter-term fixed or variable rate fits your comfort zone.
    • Don’t hesitate to negotiate. Lenders want to keep you as a client.
      

The mortgage landscape has changed swiftly since 2020, but with careful planning and a little shopping around, you can make renewal a manageable and maybe even positive milestone.