While 70% are mortgages are up for renewal, one third of Ontario homeowners may be unable to afford higher payments: a survey

Ahead of the new year, for many Ontario homeowners, the focus isn’t on buying—it’s on renewing. 70% of surveyed homeowners are renewing their mortgages in the next three years.  

For households already grappling with rising costs, this is a major source of anxiety, driven by the sharp adjustments in interest rates over the past few years, which significantly alter monthly payment structures for borrowers. 

A recent survey by LowestRates.ca found that nearly a third of Ontario homeowners were uncertain about being able to make their mortgage payments after renewal.  

The findings reveal notable trends in mortgage preferences, financial concerns, and plans for renewal. Let’s take a closer look. 

70% of Ontario homeowners have a mortgage renewal in the next three years

Around 70% of Ontario homeowners surveyed will need to renew their mortgages in the next three years—24% in 2025, 17% in 2026, and 28% in 2027. 

Over the past five years, Canada’s interest rates have seen dramatic shifts, primarily driven by the need to manage inflation. At the onset of the pandemic, the Bank of Canada (BoC) slashed its target overnight rate to 0.25% to support the economy. However, as inflation began to surge, the BoC implemented a series of rate hikes to combat rising costs, with the overnight rate peaking at 5.00% in July 2023.  

Since then, the central bank has cautiously begun easing rates, aiming to balance inflation control with economic stability. Earlier this month, the policy rate decreased to 3.25%, offering homeowners some respite. However, those approaching mortgage renewals may still face significantly higher rates compared to the historically low levels of 2020, when rates hovered near 0.25%. 

Currently, five-year variable rates stand at 5.55%, and five-year fixed rates stand at 4.59%. 

According to Canadian Mortgage and Housing Corporation (CMHC), 85% of mortgages up for renewal in 2025 were originally signed when the BoC’s rate was 1% or lower. This means, at least 1.05 million mortgage holders face a renewal in 2025 at significantly higher interest rates.  

In its May assessment, the central bank identified mortgage renewals as a significant risk to the country’s financial stability, affecting millions of households' budgets.  

Higher interest rates can significantly increase monthly payments, especially for those renewing fixed-rate mortgages originally signed at record-low rates. This added financial strain reduces spending power, slowing consumer-driven economic activity and heightening recession risks. Defaults on unaffordable mortgages could also lead to lender losses and housing market instability. 

However, recent rate cuts and competitive solutions from lenders, such as term extensions or blended rates, offer some relief. The recent rate cuts could soften the burden for some renewing homeowners.  

Additionally, term extensions or blended rates are also being offered in some cases to ease the transition. While risks remain, these mitigating factors may help households, and the broader economy adapt to the tighter financial climate. 

Related: 10 questions to ask when getting a mortgage 

30% of Ontario homeowners concerned about ability to make monthly mortgage payments

Though interest rates are on the descent, many are facing a jump from rates in the 2% range three to five years ago to above 4% currently, which, depending on the region, could add up to $1,000 more to their monthly costs. In our survey, 30% of respondents expressed concern about their ability to make monthly payments post-renewal. 

Meanwhile, 55% of homeowners surveyed reported they aren’t worried about higher monthly payments post-renewal. A further 14% of respondents are undecided, reflecting uncertainty around how these changes will impact their budgets. 

The most pressing issue for homeowners renewing fixed-rate mortgages today is “the substantial increase in monthly payments driven by today’s higher interest rates, particularly in high-cost regions like British Columbia,” says Graham Cottrell, mortgage broker at Singletrack Mortgage.

Renewing next year could mean an additional $1,000 or more per month in mortgage costs  

Rising interest rates are putting financial pressure on homeowners in high-priced markets across Canada, particularly in areas where average home prices exceed $1 million, such as Vancouver and the Greater Toronto Area (GTA). For families who locked in low mortgage rates during the pandemic, renewing now at rates in the 4% range could lead to a significant jump in monthly mortgage payments.

This kind of increase could mean hundreds, and in some cases, close to $1,000 more per month in a homeowner’s expenses. Annually, this could add up to an extra five-figure cost for some households, stretching already tight budgets.

For context, these changes aren’t just numbers—they represent real-world trade-offs. A rise of this magnitude could match costs such as monthly childcare, groceries, or other essentials. For many families, adjusting to this shift requires careful financial planning to manage the added strain.

Related: What you need to know about transferring your mortgage  

Fixed-rate mortgages dominate, but uncertainty lingers

Fixed-rate mortgages remain the top choice for Canadian homeowners, accounting for 75% of survey respondents.  

By contrast, 23% hold variable-rate mortgages, which, while riskier, offer the potential to benefit from declining rates. Yet, even among those with fixed rates, uncertainty lingers about the best path forward as mortgage renewals approach. 

Survey data shows that 18% of Ontario homeowners plan to switch to a fixed rate, drawn to the sense of security it offers against market volatility. Meanwhile, 11% are leaning towards variable rates, reflecting cautious optimism about potential rate drops.  

Joshua Harris, a licensed insolvency trustee and CEO of Harris & Partners Inc., acknowledges the fixed-versus-variable dilemma.  

“Fixed rates are often higher than initial variable rates and locking in during a peak can result in overpayment if rates subsequently decline,” says Cottrell. “On the other hand, variable rates have historically been lower over the long term and offer flexibility to benefit from rate drops. However, they come with inherent risks, as payments may increase during periods of market volatility.”  

However, Harris prefers a different tact.  

“Personally, I prefer fixed rates due to their stability. However, with rates likely to drop over the next 24 months, I currently recommend a short-term fixed rate of 2-3 years,” he advises.  

A further 20% are exploring alternative options, such as private mortgages. 

Ultimately, homeowners face a complex balancing act. Whether choosing fixed, variable, or alternative options, factoring in personal budgets and risk tolerance is essential as they weigh the best path forward in an unpredictable financial landscape. 

Learn more: All you need to know about fixed-rate mortgages and the interest rate differential  

Mortgage term preferences point to evolving needs 

Among surveyed homeowners, 52% indicated a preference for 5-year terms at renewal, while 3-year terms accounted for 23%.  

The popularity of 5-year terms reflects a long-standing preference for balancing predictability with flexibility. However, shorter terms may gain traction as homeowners anticipate future rate cuts or seek to adapt to rapidly shifting economic conditions. 

Notably, very short or very long terms aren’t very popular. 3% said they’d choose a 1-year term and 4% preferred a 10-year mortgage term. 

Compare rates today. 

Growing debt pressures for Canadian homeowners

In the first quarter of 2024, Canadian household debt hit a record high $2.41 trillion, with mortgage debt making up 74% of the total outstanding balances. Rising mortgage costs, along with higher interest on personal loans and credit cards, are putting many Canadians at risk of financial hardship.  

TransUnion Canada’s report shows total credit debt grew by 3.2% year-over-year in early 2024, highlighting the mounting pressures. 

Harris, insolvency trustee, warns that cash flow will be the primary concern for homeowners renewing their mortgages. 

“Cash flow is going to get tighter, leaving less money for day-to-day expenses and, critically, for servicing unsecured debts,” he says. 

Despite increasing debt and tighter cash flow, relatively few homeowners have opted for changes to their mortgages that might save them money in the short term: Namely, opting for longer amortization or shopping around for different lenders.  

When asked about renewing with their current lender, 44% expressed plans to stay, while 18% were likely to explore other lenders. Homeowners may also consider the potential penalty fees or lack of additional benefits from switching. 

“When considering whether to remain with a current lender or switch to a new one, homeowners should evaluate more than just interest rates,” explains Cottrell. 

 He adds, “features such as prepayment privileges, which allow extra payments without penalties, can offer significant long-term savings. Portability options that enable a mortgage to be transferred to a new property without penalties are also worth considering, especially for those anticipating a move.” 

Some homeowners choose to stay out of convenience or fear of change. This inertia could cost borrowers thousands over the life of their mortgage. 

Similarly, 69% of homeowners don’t plan to extend their amortization period at renewal, survey data reveals. Extending the amortization period is a viable option for homeowners seeking to reduce short-term financial strain. This strategy spreads payments over a longer timeline, effectively lowering monthly costs.  

13% percent of respondents, however, have plans to extend their amortization to ease short-term financial pressures, even though it delays becoming mortgage-free.  

“Homeowners must weigh the benefits of immediate relief against the long-term implications of increased interest payments over the life of the mortgage,” explains Cottrell. 

Read more: Why there’s no stigma in not going with the big banks for your mortgage 

Looking forward: Interest rates will keep dropping, but don't expect to see 2021 numbers again anytime soon - or ever

The findings from this survey are intertwined with the current state of the Canadian housing market. While interest rates have eased compared to their peak a year ago, they remain significantly higher than the historically low levels many Canadians are accustomed to. These elevated rates continue to influence homeowner decisions and overall economic conditions. 

Housing affordability remains a critical issue, particularly in urban centers like Vancouver, Calgary, and the GTA, where the cost of living continues to rise. Homeowners renewing mortgages secured during the ultra-low-rate era are and will continue to face significant payment shocks.  

While rate cuts are expected to continue, albeit more gradually, the outlook is improving compared to earlier forecasts. However, it’s important to recognize that the historically low interest rates many borrowers enjoyed were an anomaly rather than the norm, making today’s rates a challenging but more standard environment for long-term financial planning. 

*Survey conducted by LowestRates.ca, polling 1,014 of Ontario homeowners between November 23 and 24 who used LowestRates.ca’s mortgage quoter.