Homeowners across Canada are facing a sobering reality: mortgage renewals in 2025 could see payments rise by 15–20% compared to their previous terms. Despite the Bank of Canada (BoC) beginning to ease interest rates, the adjustment from ultra-low pandemic rates still poses a financial shock for many.

Why Are Renewals Increasing?

According to the Bank of Canada’s July 2025 assessment, about 60% of borrowers renewing in 2025–2026 will face higher payments, with fixed-rate holders seeing the steepest increases, averaging 15–20% more than their 2024 payments.​

This increase stems from several factors:

Lock-ins at pandemic lows

Many homeowners secured rates under 2% between 2020–2021. Renewing now, even at 4–4.5%, represents a major jump.​

Lingering inflation

While inflation has cooled, it still influences bank lending spreads and stress test criteria.

Rate normalization

The BoC’s current policy rate sits at 2.50% after a September 2025 cut, but lenders’ posted mortgage rates remain above pre-pandemic levels.​

The Bigger Picture: From Low Rates to Reality

In early 2025, surveys showed 57% of Canadians renewing their mortgages expected payment hikes, and 80% of those said it would strain their household finances. Even with rate relief on the horizon, the transition from pandemic-era borrowing costs to today’s normalized market is significant.​

RBC analysts describe this as a “payment shock”, a sudden jump in monthly costs that could challenge budgets if unprepared.​

What You Can Do About It

1. Start Early

Begin renewal discussions four to six months before your term ends. This allows time to compare rates and lock in an offer if trends move unfavorably.

2. Negotiate Strategically

Renewal time is one of your best opportunities to switch lenders or ask for discounts. Working with a mortgage brokerage like Cannect can help you secure better-than-posted rates and align terms with your budget.

3. Explore Flexible Options

• Extending the amortization to reduce monthly payments.
• Switching from variable to fixed (or vice versa) depending on your risk tolerance.
• Making lump-sum payments before renewal to reduce the principal.
  

4. Test Affordability at Renewal

Even if you stay with your lender, ensure you still pass the federal stress test, it’s based on the higher of your rate or 2% above it. Planning around this helps avoid surprises.

5. Review Other Debts and Expenses

With credit card and HELOC rates still elevated, consolidating loans or refinancing to a lower blended rate through Cannect can ease total interest costs.

What Comes Next?

Market analysts expect the BoC to lower rates again by early 2026, possibly toward 2.25% if inflation continues falling. For those renewing in 2025, this means that short-term or hybrid mortgages offer flexibility to take advantage of future rate drops.​

Conclusion

Renewing your mortgage in 2025 likely means paying 15–20% more, but proactive steps can help soften the impact. Start negotiations early, run the numbers carefully, and leverage expert advice.

At Cannect, your renewal isn’t just a line of paperwork; it’s an opportunity to rebuild savings, reduce stress, and make smarter financial decisions for the next five years.

Ready to explore your renewal options?

Talk to a Cannect expert today to find a solution that keeps your payments manageable and your financial goals on track.