The New Reality of Mortgage Renewals: Why 2026 Will Be a Pivotal Year for Homeowners

The New Reality of Mortgage Renewals: Why 2026 Will Be a Pivotal Year for Homeowners

Over the next two years, more than one third of Canadian mortgage holders will face a renewal. That is more than two million households according to data from the Bank of Canada. Many of these borrowers are locked in historically low rates between 2020 and 2022. Now they are preparing for payments that may rise by hundreds of dollars a month.

Renewals used to feel routine. Today, they are one of the most important financial decisions a homeowner will make. The landscape has shifted, and understanding what to expect can make a real difference in how manageable the next few years feel.

Here is a clear breakdown of what is happening, why it matters, and how homeowners can prepare.

How Rate Changes Are Affecting Renewals

Term Renewal Year What Homeowners Are Facing Key Notes

2025 - Many borrowers coming off three year and five year terms. Payments may increase, but gradual rate cuts could offer some relief.

2026 - The largest wave of renewals since the 1990s. More than 60 percent of fixed mortgages will renew by the end of 2026.

2027 - Variable rate borrowers may see pressure ease. Variable borrowers already absorbed increases, but still need review.

The average homeowner renewing in 2024 and 2025 is expected to see a payment increase between 20 and 40 percent depending on term length, lender, and amortization.

Why So Many Canadians Are Feeling Pressure

Household finances were already stretched even before renewal season approached. Statistics Canada reported that the average Canadian household carries more than 1.80 dollars of debt for every dollar of disposable income. When mortgage payments rise at the same time as groceries, utilities, and insurance, even financially responsible families feel the squeeze.

A recent national survey found that 71 percent of Canadians with a mortgage are concerned about the affordability of their next renewal. This is not a small group. It is the majority.

What Lenders Are Paying Attention To

Mortgage renewal is different from a brand new application, but lenders still consider several factors.

Income Stability

• Lenders want to feel confident that payments can be supported long term.

Debt Outside the Mortgage

• Higher personal debt can affect renewal offers.

Credit Behaviour

• Recent late payments, large purchases, or changes in credit limits can affect decisions.

Property Value

• Homes in stable or growing markets may offer more flexibility.

• Renewals do not always require new underwriting, but for homeowners switching lenders, documentation is often similar to a new application.

Strategies Homeowners Are Using To Manage Renewals

Canadians are adjusting in a variety of ways.

Extending Amortization

• This spreads payments over a longer period, lowering the monthly cost. It does increase long term interest, so homeowners weigh the trade off carefully.

Switching Lenders

• Some find better rates or terms by exploring other institutions.

Consolidating Debt Through a Refinance

• Higher interest credit card or line of credit debt can sometimes be restructured into the mortgage.

Shorter Terms

• Choosing a one or two year term can be a way to reset once rates settle further.

Budget Review

• Many families are taking a closer look at monthly expenses to prepare for rising payments.

• These steps are not about quick fixes. They are about protecting long term financial stability.

Common Scenarios We Are Seeing

Families Renewing From Ultra Low Rates

• Many locked in at historic lows and now face large jumps.

Variable Borrowers Considering Fixed Terms

• Some want predictability after two years of steady increases.

Homeowners With Multiple Debts

• They are exploring consolidation to simplify cash flow.

First Time Buyers Renewing For the First Time

• Many feel unprepared for rising monthly payments.

Key Takeaways

• The next two years will bring the largest renewal wave in decades.
• Most homeowners should expect payments to increase.
• Income stability, debt load, and credit behaviour all matter.
• Many Canadians are using refinances, amortization changes, or shorter terms to manage costs.
• Planning ahead can prevent last minute stress.

Talk With Your Mortgage Professional

A renewal is not just a signature. It is a chance to make sure your mortgage fits your life, not the other way around. A clear review of your options can help you feel prepared and confident before your renewal date arrives.