Five-year, COVID-era mortgage renewals are garnering most attention – but there are tough decisions for other borrowers too
The long-awaited wave of mortgages up for renewal this year and in 2026 is already well underway, with thousands of Canadians facing a jump in rates and monthly payments when they renew.
Five-year mortgages taken out in 2020 and 2021, when rates were at record lows during the COVID-19 pandemic, have been grabbing most of the headlines this year.
But there’s another customer cohort facing mortgage renewals in very different circumstances in the next 12 months: those who took out shorter-term, three-year mortgages in 2023 after rates had surged, banking on much lower borrowing costs down the line.
That means a big difference between many borrowers renewing their mortgage in 2026. While plenty of COVID-era mortgagors enjoyed lower rates in recent years, those who took out a mortgage in 2023 have been paying more – and have had less time to pay down the debt and build equity.
“We have a really big wave coming of clients that will have equity [those who took out five-year mortgages in 2021]… but other clients won’t have the equity, and rates haven’t come down significantly as much as they were hoping,” Sarah Albert (pictured top), a New Brunswick-based mortgage broker, told Canadian Mortgage Professional.
“They’re two different mindsets of clients with two very different equity positions and who’ve moved through different rate environments. So the conversations will be unique for each cohort.”
No one-size-fits-all solution for renewing borrowers
Plenty of those clients who took out shorter-term mortgages in 2023 won’t be in a position to refinance, Albert noted – but if their case is a straight switch, she said lenders will probably fight hard to keep them.
That can make it difficult for brokers to compete. “[Current lenders] will be quite competitive in the interest rates,” she said.
“So I find as a broker that it can be really hard to come up on a straight switch from a lender, especially if a client’s income or credit situation has changed. Sometimes they’re just better to sign their renewal.”
It’s a different story for others who have faced struggles meeting their mortgage payments during that period. Some will need to move to another lender – with alternative options often the only solution for them.
And others are facing even sharper pain: the possibility that an existing lender may not renew their mortgage, and they can’t be moved elsewhere.
Those dynamics, Albert said, underscore the reality that despite talk of a renewal wave, no two clients have the same circumstances.
“Everything is unique,” she said. “What’s happened in their financial situation? How has their family changed? Has there been any change or decrease in income? We’re running into a lot of clients that have moved to contract or self-employed work.
“In the five years since COVID, a lot of people’s lives have evolved and changed – and we have to adapt to that. So this isn’t cookie cutter to people working for a company with a paystub and a job letter anymore.”
Plenty of other customers, meanwhile, have seen unexpected developments in their household arrangements. “More and more families have elderly parents living with them,” Albert said. “They still have kids at home that haven’t been able to leave. So I’m seeing a really different family dynamic and need for different types of housing.”
Many five-year fixed borrowers facing less pain than first expected
The good news is that many of those clients with five-year mortgages coming up for renewal aren’t seeing the huge payment shock some had feared before rates started to fall in 2024 and this year.
Still, Albert said renewing those mortgages isn’t exactly straightforward for plenty. “I’m finding our clients are still financially able to make it and it’s still affordable for them,” she said, “but we’re definitely having to restructure a lot of folks at renewal.
“A lot of clients coming up have 15 or 20 years left on their mortgage and we’re going back up to paying debt over 25, 30 years. We have to, with the cost of everything.”
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