Three-quarters of borrowers choose fixed mortgages to weather uncertainty
As mortgage renewals loom for thousands of Canadian homeowners, many are already tightening their budgets to absorb higher monthly payments.
A recent survey from TD Bank revealed growing financial strain among borrowers, with 73% of respondents planning to reduce spending in anticipation of a costlier renewal. Nearly half of surveyed homeowners expect their mortgage payments to rise once they renew.
Despite modest declines in interest rates, they're still well above the historic lows that defined lending conditions before 2022. The TD survey, conducted in April by The Harris Poll, revealed that 23% of respondents will be renewing their mortgage within the next year, prompting many to explore serious trade-offs to stay financially afloat.
About 43% plan to delay home renovations, 29% may sell or downsize, 15% are considering taking on a roommate, and 15% are looking to move to a more affordable neighbourhood.
While homeowners are adjusting, the affordability crunch is also reshaping behaviour among prospective buyers. More than half (55%) are already cutting non-essential spending, while 31% say they may liquidate investments to afford a home.
Fixed rates favoured
With market volatility and economic uncertainty on the rise, three out of four borrowers nearing renewal (75%) are opting for fixed-rate mortgages to ensure predictability.
"While our survey found that 75% of those preparing to renew their mortgage this year are leaning towards a fixed instead of a variable rate mortgage, it's important to remember that there isn't a one-size-fits-all approach to choosing what will work for you," said Patrick Smith, TD’s vice-president of product management for real estate secured lending.
Concerns over debt loads and affordability were also key themes. Top anxieties among surveyed Canadians included:
- Affording a down payment (45%)
- Knowing how much they can reasonably spend (43%)
- Managing monthly payments (42%)
- Finding competitive mortgage rates (42%)
Younger generations, particularly Gen Z and Millennials, expressed higher uncertainty. About a quarter of Gen Z (25%) and Millennials (23%) admitted they didn’t know where to start the homebuying process, and roughly one in five felt anxious about not having a trusted source for guidance.
“As Canadians navigate a dynamic economy that seems to be evolving daily, we understand how challenging it can be for them to know if they're making the right decision when it comes to real estate,” Smith said. “Different factors can impact each individual's home buying decisions in unique ways.”
The national survey gathered responses from 890 current homeowners and 881 prospective buyers, with a minimum of 100 participants surveyed per region across Canada.
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