Canadians Brace For Higher Payments In Their Mortgage Renewals

Survey finds 60% of homeowners are cutting back on spending to manage higher renewal costs

As more than one million Canadian mortgages come up for renewal in 2025, many homeowners are preparing for significantly higher monthly payments after securing their loans at record-low interest rates in previous years.

A Royal LePage survey reveals that 57% of homeowners renewing this year expect their mortgage costs to rise, with 22% anticipating a significant increase.

The impact of these higher payments is likely to be widespread. According to the survey, 81% of homeowners expecting an increase say it will strain their household finances, with many preparing to make budget adjustments.

The financial strain is pushing Canadians to rethink their spending. According to the survey, 60% plan to reduce discretionary spending, 43% will cut back on travel, 36% will save or invest less, 34% will trim spending on essentials like groceries and gas, while 23% are considering taking a second job or finding new income sources.

Despite these concerns, Canadians remain committed to their homes.

“Even in challenging financial times, Canadians continue to prioritize homeownership and paying down their mortgages—cutting back on other spending, and even savings, if absolutely necessary,” said Phil Soper, president and CEO of Royal LePage.

More homeowners eyeing variable rates

With mortgage rates on a downward trend, some borrowers are reconsidering their financing options. The survey found that while 66% of homeowners still plan to renew with a fixed-rate mortgage, the number choosing variable-rate loans has increased to 29%, up from 24%.

“Since last summer, the Bank of Canada has made several cuts to its overnight lending rate, amounting to a decline of 200 basis points thus far, driving variable mortgage rates down in tandem,” Soper explained.

“For homeowners looking to reduce their monthly payments or pay down their principal faster, variable-rate mortgages have become an increasingly attractive option in today’s declining rate environment.”

Trade tensions

As economic uncertainty looms due to ongoing trade tensions between Canada and the US, the Bank of Canada may be forced to act. The survey notes that a prolonged trade conflict could increase inflationary pressure and disrupt Canada’s economy, potentially leading to more aggressive rate cuts by the central bank.

“While a trade war with our southern neighbour offers little economic benefit, new homebuyers and those renewing a mortgage this year may find a silver lining: lower borrowing rates,” Soper said. “If the Bank of Canada is forced to take measures to bolster a weakening economy, we could see faster and deeper rate cuts, at least in the short term.”

Not all homeowners will be affected in the same way. Saskatchewan and Manitoba have the highest number of homeowners worried about affordability, with 89% expecting financial strain. Atlantic Canada homeowners (64%) are also preparing for increased costs.