Five years ago, the Bank of Canada’s overnight rate was a record low of .25% as an economic cushion against COVID-19. As a result, the benchmark mortgage rate was 2.45%, and discounted promo rates dropped as low as 1.39% for a five-year fixed rate and 0.85% for a five-year variable rate.
A lot has changed since then, and it’s not necessarily good news for many Canadians whose five-year fixed-rate mortgages are coming up for renewal and facing higher rates, according to a new report from Royal LePage.
“The pandemic-triggered era of ultra-low rates came to an abrupt halt in early 2022, having lasted less than two years. While many Canadians who secured record-low mortgages during this period have already navigated their renewals, the final major group of rock-bottom rate holders are up for renewal, and understandably, they are concerned,” said Phil Soper, president and CEO, Royal LePage.
“What we are finding in practice is that families are managing the transition. Borrowing rates have retreated significantly from their post-pandemic peaks, while salaries and wages have continued to appreciate. While some households are adjusting discretionary spending to accommodate higher monthly mortgage payments, the widespread default crisis many feared simply hasn’t materialized, a testament in large part to Canada’s prudent lending standards.”
A Royal LePage survey, conducted by Burson, found 38% of Canadians with a mortgage on their primary residence expect their monthly mortgage payment to increase, with 26% expecting a slight increase and 12% expecting a significant jump. While many borrowers anticipate higher costs at renewal, concerns have eased since early 2025, when a majority of renewing mortgage holders (57%) expected their monthly payments to rise. Nationwide, 31% of respondents today expect their mortgage payments to stay approximately the same, while 17% expect their payment to decrease.
Expectations vary across Canada.
“Respondents in Saskatchewan and Manitoba are the most likely to anticipate a higher monthly payment at renewal (43%), while those in Alberta are the least likely (29%),” says the report. “In the rest of the country, responses are broadly aligned, with 39% of respondents in Ontario, Quebec and Atlantic Canada, and 37% in British Columbia expecting an increase in their monthly payments.”
Homeowners in Canada’s two most expensive housing markets, report higher-than-average anxiety about their upcoming renewals, with 45% of respondents in Vancouver and 39% in Toronto saying they feel more anxious than they did at their previous renewal. Meanwhile, 34% of respondents in Montreal and 32% in Calgary report feeling more anxious about their upcoming renewal.
“Anxiety around mortgage renewals tends to be greater in British Columbia because outstanding mortgage balances are often much larger. The same increase in interest rates that adds a few hundred dollars to a monthly payment in other parts of the country can have a much greater impact in Metro Vancouver,” said Adil Dinani, sales representative and team lead of the Dinani Group, Royal LePage West Real Estate Services in Greater Vancouver.
“Even so, most homeowners are looking for ways to stay in their homes rather than sell to reduce their housing costs. When payments put pressure on the household budget, many are exploring practical options, whether that is generating rental income, adjusting spending, or in some cases, selling an investment property. People are adapting to changing conditions rather than making rushed decisions.”
“Anxiety is concentrated right where you would expect it, among homeowners who bought or refinanced when the overnight rate sat at .25%,” said Soper. “Logically, no one expected rates to stay that low forever, but knowing a rate hike is coming intellectually and seeing the actual monthly dollar increase on paper are two very different things. Importantly, the vast majority of these 2021 borrowers were stress-tested at rates near 5% or higher. They are moving into a rate environment they have already proven they can handle.”
Federal mortgage qualification rules are borrowers must demonstrate they can afford payments at a rate higher than the one they are offered by their lender.
Today, buyers must qualify at the greater of their contract rate plus two percentage points or 5.25%. As a result, homeowners who purchased in 2021 were required to qualify at a minimum rate of 5.25%, which is higher than most five-year fixed rates available today.
