Mortgage owners brace for increase, as 1.2 million Canadians up for renewal

Dave Steele is playing the waiting game with his mortgage, holding off on his renewal as long as he can with the hope that interest rates drop before he signs a new agreement.

“Because if the rates continue to go down, I want the best rate possible,” said Steele.

His mortgage renewal deadline is in August, and he knows it will cost him more with current interest rates.

"I know the rate I have now is in the low twos, and I’m not going to get that,” he said.

But Steele isn’t alone in feeling the financial squeeze. According to the latest mortgage report by the Canadian Mortgage and Housing Corporation:

•  1.2 million mortgages are up for renewal this year.
•  85 per cent of these were contracted when the Bank of Canada’s interest rate was at or below 1 per cent.

Steele, admits he is typically a five-year fixed rate guy, but is now considering a shorter term.

“I’m willing to try something different,” said Steele.

This time last year, the Bank of Canada’s key overnight interest rate was at five per cent, but that number has steadily dropped since June to 3.25 per cent.

Like many Canadians, Steele is betting on a shorter term, hoping rates eventually drop back to around one per cent.

Halifax-based mortgage broker Clinton Wilkins says he’s seeing a lot more short-term agreement being made.

"A variable rate mortgage is definitely more popular now,” said Wilkins. “But the three-year fixed is one of the most popular options we’re seeing."

Wilkins expects a gradual cooling of interest rates as the Bank of Canada is expected to continue to ease the pressure and slowly drop the overnight rate.

"The renewal landscape is looking more optimistic than it was in 2024, with several rate decreases already,” said Wilkins.

Wilkins’ best advice is to seek the advice from a mortgage professional.

The Bank of Canada is expected to revisit the key interest rate at the end of January. It’s hard to predict if rates will drop again but that’s what many like Steele are hoping for.

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