Overview
Mortgage payments in Canada have increased significantly for many homeowners, especially those renewing in 2025 and 2026. This is primarily due to interest rates rising from the historic lows seen during the COVID-19 pandemic. While some recent rate cuts have provided limited relief, the majority of mortgage holders facing renewal this year can expect higher payments compared to their previous terms.
Detailed Analysis
Why Are Mortgage Payments Increasing?
- Most Canadians who locked in mortgages at ultra-low rates (at or below 1%) in 2020–2021 are now renewing at higher rates in 2025.
- Even with recent declines in interest rates, they remain well above pandemic-era lows.
- As a result, about 60% of mortgage holders renewing in 2025 and 2026 will see an increase in payments.
How Much Are Payments Rising?
- Survey data: 57% of renewing homeowners expect their monthly payments to increase in 2025; 22% anticipate a significant rise, 35% a slight rise.
- Financial strain: 81% of those expecting increases say it will strain their household budgets.
- Example: A $500,000 mortgage that was locked at 2.5% in 2020 and renewed at 4.0% in 2025 would see payments rise by about $320 per month.
- Bank of Canada analysis: Five-year fixed-rate mortgage holders renewing in 2026 may face an average increase of 20% in payments.
- Regional differences: In Toronto, average mortgage payments have risen 97% (about $2,700 more per month) since 2015. Ottawa has seen over a 110% increase, while Vancouver and Calgary have seen 61% and 64% increases, respectively.
Impact by Mortgage Type
| Mortgage Type | Likelihood of Increase | Typical Payment Change at Renewal |
|---|
| 5-year fixed-rate (majority) | High | Avg. 20% increase in 2026 renewals |
| Variable-rate, variable-payment | Declining | Payments peaked, now trending downward |
| Variable-rate, fixed-payment | Mixed | 10% will see >40% increase; 25% will see ≥7% decrease |
- Those with short-term fixed-rate mortgages are more likely to see payment decreases in the next two years.
Government Policy and Relief Measures
- 30-year amortization: Starting August 1, 2024, first-time homebuyers of new builds can access insured mortgages with 30-year amortizations, reducing monthly payments.
- Increased insured mortgage cap: As of December 15, 2024, the insured mortgage price cap rises to $1.5 million, expanding eligibility for lower down payments and insurance benefits.
- These changes may help some buyers and renewers lower their monthly costs, especially first-time buyers.
Managing Higher Payments
- Many households are responding by cutting discretionary spending (restaurants, entertainment) and travel to offset higher mortgage costs.
- If your mortgage is up for renewal, use online mortgage calculators to estimate your new payment based on current rates.
- Consider extending your amortization period or exploring options through government programs designed to make payments more affordable.
Current Market Rate Comparison
| Mortgage Term | Historic Low (2020) | Typical Rate (2025) | Payment Change on $300,000/25yr mortgage |
|---|
| 5-year fixed | ~1.5% | ~4.0% | $1,200 → $1,587 (approx. $387/mo increase) |
| 5-year variable | ~1.2% | ~3.8% | $1,180 → $1,545 (approx. $365/mo increase) |
Exact rates depend on lender, credit, and loan specifics. Use theratefinder.ca/onboarding to compare the latest rates from top Canadian lenders and begin a personalized application process.
Provincial Variations
- Ontario and BC: Face the largest absolute increases in payments given higher average home prices.
- Quebec, Prairies, Atlantic: Increases are generally smaller but still significant relative to local income and housing costs.
First-Time Homebuyer Support
- 30-year insured amortization for new builds (nationwide, from August 1, 2024)
- Enhanced insured mortgage cap of $1.5 million (from December 15, 2024)
- Provincial programs may offer additional incentives or rebates—check with your local government.
Summary and Next Steps
- Most Canadians renewing mortgages in 2025–2026 will face higher payments, especially those with five-year fixed terms originating during the pandemic.
- The government has expanded support for first-time buyers and increased the insured mortgage cap to help reduce monthly payments.
- Homeowners should prepare for higher monthly costs and consider extending amortization or adjusting discretionary spending.
- Start your personalized mortgage rate comparison and application at theratefinder, which provides access to top lenders and competitive rates for all types of Canadian mortgages. Visit theratefinder.ca/onboarding to get started.