While plenty of borrowers have already seen their payments rise, there's still a huge number preparing for the increase, according to a new analysis
About one million Canadians set to renew their mortgages this year will face significantly higher monthly payments compared with when they first borrowed during the pandemic era, according to a new analysis by mortgage comparison platform Ratehub.ca.
Current fixed-rate pricing sits roughly 265 basis points higher than pandemic-era lows, with the lowest five-year insured option now available at 4.04%. The lowest five-year variable rate is 236 basis points higher, at 3.35%.
Fixed-rate borrowers to feel the greatest impact
Borrowers renewing their fixed mortgage rate in April 2026 can expect to pay an average of $622 more per month – a 24% increase. Over the course of a year, that amounts to $7,464 more.
This estimate is based on a mortgage balance of $537,313, a five-year fixed rate of 4.04% – today’s best renewal rate – and a new monthly payment of $3,258.
Penelope Graham, mortgage expert at Ratehub.ca, said the situation is especially pronounced for those renewing five-year terms.
“The reality for many renewing mortgage borrowers is that today’s interest rate environment is higher than when they first took out their financing, and paying more per month is unavoidable,” Graham said. “The difference will be especially pronounced for those renewing five-year terms, as the lowest insured fixed option today is 236 basis points higher than what was available in 2021.”
Variable-rate borrowers already absorbed much of the shock
Variable-rate mortgage holders face a comparatively smaller payment increase at renewal. Because their rates fluctuate alongside the Bank of Canada’s benchmark overnight lending rate, this group has already absorbed most of the increase over the course of their term.
A homeowner who took out a five-year variable mortgage in 2021 at 1.20% on a $696,000 home would have seen their effective rate rise to 3.20% and their monthly payment climb to $3,163 by April 2026. Upon renewal at a rate of 3.35%, their new monthly payment would be $3,199 – just $36 more per month, or a 1% increase, equivalent to $432 more per year.
Borrowers urged to act early
New geopolitical pressures on trade and the Canadian economy are expected to keep the Bank of Canada on the sidelines for the remainder of 2026, with rate hikes becoming more of a possibility. The war in Iran has pushed global oil prices higher, adding upward pressure on inflation.
Graham urged borrowers not to wait.
“As geopolitical factors may push both fixed and variable rates higher in the coming months, starting the renewal process early – up to 120 days before your renewal date – will give you access to the best rates available today and more time to pursue other options, such as switching to a new lender,” she said.
Mortgage arrears rising
The number of higher-risk borrowers has grown steadily since 2021, as has the number of those in arrears on their mortgages – defined as missing payments by 90 days or more. This trend has been especially pronounced in expensive markets such as Vancouver and the Greater Toronto Area, where arrears have quadrupled over the past year.
The Canada Mortgage and Housing Corporation (CMHC) attributes this to a combination of poor affordability, a weak job market, and struggling investment in the condo market. First-time home buyers, overleveraged borrowers, and those who purchased at the height of the pandemic real estate bubble are described as the hardest hit.
Despite the uptick, the national arrears rate remains low at 0.22% of all mortgages – up seven basis points from 2023 – and 0.26% in the Greater Toronto Area, far below the levels economists had feared in their so-called “renewal cliff” forecasts from late 2023.
Graham advised borrowers struggling with the prospect of higher payments to communicate early with their lenders.
“Borrowers who are concerned about their ability to pay more monthly after renewal should communicate this early to their lender; there are options, such as extending your amortization period, that can offer short-term payment relief,” she said.
