Indicators show Canada’s red-hot housing markets will soon more resemble the smoldering embers of a once roaring fire after a long weekend of camping. Interest in future purchasing intentions has shown a significant decline, year-over year, according to new data from Ratehub.ca, showing purchase enquiries for mortgages accounts for 47% of its traffic from January to April in 2025, compared to 71% in 2024. “Shifts in borrower preference align with this year’s real estate trends. Fewer Canadians are looking to purchase a home amid a rocky economic climate, resulting in fewer purchases from mortgage rate shoppers,” says Penelope Graham of Ratehub.ca. “Meanwhile, the number of mortgage terms coming up for renewal has increased and given today’s interest rates are considerably higher than in 2020, borrowers are especially rate motivated and are looking to ease the impact of higher payments at renewal time.” A boatful of five-year mortgages taken out during COVID-19 are coming up for renewal this spring says Graham. “This renewal wave is expected to accelerate in the coming months. While national home sales slumped in April 2020 due to the initial shock of COVID, transactions rapidly picked up in May and June of that year, many of which are now coming to the end of their five-year terms,” she says. .Interest in variable rate mortgages has shown a slight interest since the Bank of Canada began reducing its rate a year ago. “The Bank of Canada’s rate cutting cycle, which kicked off in June 2024, has lowered variable mortgage rates by a total of 225 basis points, taking considerable pressure off floating-rate borrowers,” says Graham. “That modestly boosted inquiries for five-year variable-rate terms on Ratehub.ca to 8%, compared to just 5% in 2024. However, as variable rates remain elevated compared to 2020 levels, and generally higher than five-year fixed-rate terms, consumer demand for them hasn’t increased significantly.” There has been increased interest in shorter fixed rate term mortgages, says Graham. “Amid ongoing market volatility, borrowers have sought out rate options with built-in flexibility,” she says. “This is apparent in the strong uptick of inquiries for three-year terms, at 12% in 2025 compared to 7% in 2024.” “A shorter fixed-rate term has been a popular solution for borrowers to avoid the rate hikes that took place over 2023 and 2024, with the ability to change their mortgage features and rate sooner than if they had locked in with a five-year term.” Rate inquiries for 5-year fixed-rate mortgages, on the other hand, account for 77% in 2025 compared to 83% in 2024. .Refinance inquiries have doubled to 12% this year, from 6% in 2024. “This reflects the strain many households are facing due to higher interest rates; as borrowing costs have lowered over the past year, borrowers may find it’s worth it to pay a penalty to break their mortgage and take out a lower rate,” says Graham. “Overall financial pressures may have also prompted households to pull equity out of their homes to aid in cash flow.” Graham offers an example of a renewal calculation. “According to Ratehub.ca’s mortgage payment calculator, a homeowner who put a 10% down payment on a $488,000 home, the average price of a home in Canada in April 2020, with a five-year fixed rate of 2.14%, the best rate they could receive five years ago, amortized over 25 years, for a total mortgage amount of $452,815, would have had a monthly mortgage payment of $1,948,” she says. “When renewing in April 2025, they would have a mortgage balance of $380,438, a five-year fixed rate of 3.74%, April’s best renewal rate and a new monthly mortgage payment of $2,248”. “This means that the homeowner will pay $300 more per month, a 15% increase, or $3,600 more per year on their mortgage payments.”
