The housing crisis is about to get real.Canada could be on the cusp of a major mortgage meltdown if interest rates keep climbing after the Bank of Canada signalled Wednesday more interest rate hikes could be on the horizon if inflation keeps rising.It comes as a third of all homeowners face mortgage renewals over the next 12 to 18 months, according to a new report from Royal LePage. And of those, 74% of mortgagees with lending agreements report feeling concerned about even higher rates.That means 3.4 million Canadians have a mortgage that’s set to renew by March 2025, LePage said. Perhaps, it’s no coincidence that’s when the central bank sees the national economy returning to healthy, sustainable growth.“Some Canadians with variable-rate mortgages have seen their monthly payments double or even triple over the last year and half, due to the Bank of Canada’s aggressive interest rate hike campaign aimed at tamping down high inflation," said Karen Yolevski, the company’s chief operating officer. "Those locked in to a fixed-rate mortgage…have been protected from those increases, at least for a short time.” .“While the central bank’s key lending rate is expected to come down in the medium term, the likelihood that we will return to rock-bottom rates of less than 1% is very low. Upon renewal, fixed-rate mortgage holders will be faced with a new reality — higher monthly payments.”Royal LePage COO Karen Yolevski.Ironically, the Bank of Canada said one of the leading contributors to higher inflation is higher housing costs, both for mortgages and rents.“There is no doubt that Canadians’ financial stability has been put to the test over the last few years. In addition to home prices skyrocketing in 2021 and the start of 2022 — followed by interest rate increases that have caused monthly mortgage payments to rise by hundreds, if not thousands, of dollars — the cost of everyday essentials like food and fuel have also surged,” said Yolevski. On the bright side, the Canadian Bankers Association says only 15 out of every 10,000 mortgaged households in Canada are more than 90 days behind on their payments as of August 2023, the lowest level in decades..Analysts say the added impact of Canadian mortgage renewals could top $37 billion if all are renewed at present rates, without factoring in any new interest hikes..But that could change.Earlier this month, analysts at Keefe, Bruyette & Woods warned the added impact of Canadian mortgage renewals could top $37 billion if all are renewed at present rates, without factoring in any new interest hikes.“The resulting hit to both consumer spending and economic growth would be meaningful, indicating that a 'higher rates for longer' theme could easily push Canada into a more severe recession than is currently expected,” they wrote. In addition, Canada’s bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), said it won’t exempt uninsured borrowers from the tighter mortgage stress test if they switch to a different lender when renewals come due.Indeed, the OFSI has been under pressure to relax those requirements as higher rates make it harder for borrowers to qualify.Last week it made it clear that it won’t. “The new lender must do its own due diligence as it will own the credit risk for an uninsured loan,” as part of its response to broader industry concerns over new lending rules..Negative impacts more likely in high-cost markets like metro-Vancouver and the GTA.The LePage report notes any potential negative impact will be more acutely felt in markets with higher house prices in addition to higher rates, such as metro-Vancouver and the Greater Toronto region. Those fears prompted British Columbia Premier David Eby to personally write Bank of Canada Governor Tiff Macklem, urging him to hold rates flat or even begin reducing them.But LePage says buyers on the Prairies should be in better shape to withstand any mortgage increases due to the relative affordability of house prices themselves.“With average home prices significantly lower here, rising interest rates have had less of an impact on real estate markets in the Prairies, compared to major cities and urban centres elsewhere in Canada. Still, a material increase in a monthly mortgage payment can put pressure on any family’s financial health,” said Chris Pennycook, a LePage sales representative in Winnipeg.