While rates have come down 225 basis points from their peak in 2023, the popular five-year fixed mortgage rate is between 4 and 4.5 per cent, compared with less than 2 per cent in 2020 and 2021.JONATHAN HAYWARD/The Canadian Press
The Bank of Canada gave borrowers no relief in Wednesday’s rate decision, leaving many homeowners facing higher mortgage payments when they renew their loans this year.
The central bank left its benchmark rate unchanged at 2.75 per cent, which means mortgage rates are still higher than they were five years ago when thousands of Canadians borrowed at record low costs.
Economists have predicted that many Canadians would face a renewal shock this year as their five-year mortgages came up for renewal. While rates have come down 225 basis points from their peak in 2023, the popular five-year fixed mortgage rate is between 4 and 4.5 per cent, compared with less than 2 per cent in 2020 and 2021.
The increased payments are leading households to clamp down on spending so they can handle the costs. In some cases, the increases have contributed to mortgage delinquencies in the country’s most expensive real estate markets in Ontario and British Columbia.
Signs of resilience in the Canadian economy were enough for the Bank of Canada to leave its benchmark interest rate unchanged at 2.75 per cent, but the spectre of U.S. trade uncertainty continues to cast a shadow over the central bank’s decisions. (July 30, 2025)
The Canadian Press
“There are signs of mounting stress among mortgage holders,” Royal Bank of Canada assistant chief economist Robert Hogue told The Globe and Mail.
The mortgage delinquency rate, which measures homeowners who have not made a payment for at least 90 days, was 0.24 per cent in Ontario in the first quarter of this year, according to credit reporting agency Equifax Inc. That is up 71.5 per cent from a year earlier. In B.C., the mortgage delinquency rate was 0.18 per cent, which was 33-per-cent higher than a year earlier.
Mr. Hogue said the higher mortgage payments at renewal could be causing trouble for other types of debt given that delinquency rates for credit cards and other loans are now exceeding prepandemic levels.
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He expects mortgage delinquencies to continue to rise as more borrowers have to shoulder increased monthly payments and as job prospects deteriorate.
Sixty per cent of the country’s outstanding mortgages are due to renew over the next two years, according to a recent analysis from Bank of Canada staff.
The analysis found that the average monthly mortgage payment could be 10-per-cent more for those renewing this year and 6-per-cent more for those renewing in 2026.
Homeowners with a five-year fixed mortgage could face an average payment increase of 15 per cent to 20 per cent if they are renewing this year and next. Meanwhile, homeowners with a variable-rate loan could see average payments decline 5 per cent to 7 per cent.
Meaghan Hastings, who has been brokering mortgages in the Toronto region for 25 years, said some of her clients are choosing to refinance and consolidate their debt.
“While it might be a bit of a shock now, for the most part they can manage it,” said Ms. Hastings, a broker with The Mortgage Coach. “Clients are much more aware of spending and are making an effort to stretch their dollar,” she said.
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At the same time, there are other homeowners who have seen their wages increase over the past five years and they have been able to handle the higher payments.
Ron Butler, who has been in the mortgage business for three decades, said renewals have been brisk. He said his company Butler Mortgage does not push refinancings or longer amortizations but said that about one-quarter of its clients are looking for a way to deal with the higher payments.
“They are searching for alternatives that will improve their financial situation,” he said.
The federal government recently loosened mortgage rules and is allowing first-time homebuyers to make smaller down payments on a home and stretch out payments over 30 years.
Previously, borrowers had to make a down payment that was at least 20 per cent of the property’s purchase price to have an amortization period that was more than 25 years.