The Renewal Wave Is Here: What It Means for Canadian Homeowners and the Real Estate Market
As of November 2025, the Canadian housing market is navigating one of the most significant transitions in recent memory: the mortgage renewal wave. With roughly 60% of mortgages set to renew in 2025–2026, millions of households are adjusting to higher borrowing costs that are reshaping their financial outlook.
While the phrase “payment shock” makes headlines, the reality is more nuanced—and for many families, the challenge is about cash-flow management, not financial collapse.
Mortgage Renewals: The Payment Pressure in 2025
The Bank of Canada estimates that Canadians renewing this year are facing an average payment increase of 10% in 2025, with a further 6% rise projected for 2026.
Five-year fixed borrowers who locked in at record lows in 2020–21 are seeing the largest hikes—15–20% higher payments at renewal.
Variable-rate borrowers with adjustable payments are actually catching a break, with renewals leading to 5–7% lower payments as rates have eased since their peak.
For households with rising payments, the median mortgage debt-service ratio (MDSR) is projected to climb from 15.3% in late 2024 to 18.0% by 2026. While that represents a noticeable squeeze on disposable income, it’s not severe enough to trigger widespread defaults.
Risk, But Not Crisis
Canada’s banking regulator, OSFI, continues to flag mortgage renewals as one of the top systemic risks. However, the good news is that mortgage arrears remain very low by historical standards as of mid-2025.
Where the impact is being felt most is in consumer spending. With more household income directed toward mortgages, discretionary spending is slowing. Non-mortgage delinquencies remain elevated compared to last year, though they appear to be stabilizing.
Rate Cuts: Relief on the Horizon?
In a significant policy shift, the Bank of Canada cut its overnight rate to 2.50% on September 17, 2025. This move reflects a weakening economy and provides some breathing room for borrowers, especially those renewing variable-rate mortgages.
Still, today’s rates remain far above the near-zero levels of the early 2020s, meaning most renewals will continue to feel more expensive compared to the last cycle.
Real Estate Market in Late 2025: Signs of Balance
Despite renewal pressures, the housing market has shown resilience throughout 2025:
Resale activity: Home sales in August 2025 were up 1.1% month-over-month and 1.9% year-over-year, the strongest August since 2021.
Supply and balance: New listings rose 2.6%, while the sales-to-new-listings ratio sat at 51.2%—a sign of a balanced market. Months of inventory stood at 4.4, just under the long-term average.
Prices: The MLS® Home Price Index fell 3.4% year-over-year in August, though the average national sale price increased by 1.8%. Teranet’s index tells a similar story, showing a 2.5% year-over-year price decline.
Regional divergence: Prairie and Quebec markets remain firmer, while Toronto and Vancouver continue to face downward pressure.
On the rental side, the surge in construction is making a difference. Vacancy rates are edging up and rent growth has cooled from the record-setting pace of 2023. Purpose-built rental supply continues to expand, with CMHC programs supporting 200,000+ new units since 2017.
What This Means for Business Owners and Families
The renewal wave of 2025–26 is less about a credit crisis and more about household cash-flow adjustments. For business owners and families, this is a pivotal moment to ensure your mortgage and wealth strategies are aligned.
Renewal strategy: Shop early, consider term flexibility, and evaluate amortization adjustments.
Tax efficiency: Assess whether to prioritize prepayments or preserve liquidity for business and investment opportunities.
Long-term planning: Ensure estate, succession, and retirement plans remain on track despite changing mortgage costs.
The Bottom Line
As of November 2025, Canadian homeowners are living through the largest renewal wave in decades. While payment increases are real, the broader system remains resilient, supported by stress-test buffers, ongoing rate cuts, and a balanced housing market.
For WealthCo clients, the key takeaway is this: your mortgage renewal isn’t just a financing decision—it’s a wealth-planning decision.
At WealthCo, we help business owners and families navigate these financial turning points with clarity. If your mortgage renewal is approaching—or you want to understand how today’s housing shifts fit into your broader wealth plan—connect with our advisory team today.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Canadian tax and estate laws are complex and subject to change. Please consult your WealthCo advisor and other qualified professionals before making decisions related to philanthropy or wealth planning.
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