Five years after the initial housing buying frenzy took hold in Canada, two stronger forces in housing markets across the country are on a collision course: a wave of mortgage renewals is hitting homes now and into 2026 and home sales and prices are dropping.

Online real estate portal Zoocasa says a Bank Canada report shows about 60% of all outstanding mortgages are coming up for renewal over the next 18 months.

The majority are five-year fixed-rate mortgages acquired during the pandemic, when interest rates were at historic lows, meaning when those mortgages come up for renewal, most households will see increases in their monthly payments.

Zoocasa notes the rate of increase will vary by market, adding the average increase is smaller than originally expected because of a series of rate cuts since April 2024.

Reports from markets across the country show year-over-year price drops in major markets including the Greater Toronto Area, Greater Vancouver Area, Kitchener-Waterloo and others, including Calgary, which had its first annual price drop in five years.

It’s good news and bad news. Good for anyone wanting to buy but bad for current owners.

“It could mean less equity, tougher refinancing, and limited options when renewing or switching to a new lender,” says the Zoocasa report. “In some cases, homeowners with small downpayments could even face negative equity.”

For its study, Zoocasa looked average home prices in 26 major markets in June 2020, estimating what the increase in monthly payments would be for Canadians renewing their mortgages at today’s higher interest rates.

“The comparison uses a five-year, fixed-rate of 4.94% from 2020 and a current rate of 6.49%, assuming a 10% downpayment with CMHC insurance included,” says Zoocasa. “Monthly mortgage payments were calculated using the CMHC mortgage calculator, while remaining balances and projected second-term payments were determined with the TD mortgage calculator.”

Despite having a lower average home price than the major cities of Toronto or Vancouver, BC’s Fraser Valley saw the most significant jump in mortgage payments at renewal, because it had a lower monthly payment than the bigger cities of $4,182. With increased rates a $208 rise per month is close to a 5% increase, or an extra $2,496 per year.

In Calgary, the starting home price was $448,338, with a mortgage of $416,013 at a rate of 4.94% and monthly payment of $2,405. With the mortgage value at $367,855 at the end of the first term and a new rate of 6.49%, the monthly payment becomes $2,462, with a mortgage value of $332,721 at the end of the second term.

In Edmonton, the starting home price was $363,795, with a mortgage value of $337,566 at the 4.94% rate and a monthly payment of $1,952. With a mortgage value of $298,488 at the end of the first term and a rate of 6.49%, the monthly payment becomes $1,998, with a mortgage value of $269,980 at the end of the second term.

In Canada’s most expensive housing market, the average price in 2020 was $1,049,475 in Greater Vancouver, with a mortgage value of $973,808 at 4.94% for a monthly payment of $5,630 and mortgage value at the end of the first term of $861,078. At the rate of 6.49%, the monthly payment becomes $5,762, with a mortgage balance of $778,836 at the end of the second term.

In Greater Toronto, 2020’s average price was $930,869, with a mortgage value of $863,753 at 4.94% for a monthly payment of $4,994 and a mortgage balance of $763,764 at the end of the first term. At the new rate of 6.49%, the monthly payment goes to $5,111, with a mortgage value of $690,817 at the end of the end of the second term.

“Across the country, this pattern repeats,” says Zoocasa. “Throughout all regions analyzed in the report, seven will see their annual mortgage payments rise by a total of more than $1,000, including Victoria, Hamilton-Burlington and Kitchener-Waterloo.”

Another 14 regions, including such cities as Ottawa, Montreal, and Halifax are seeing more moderate annual increases of between $500 to $999 and five other regions, including Thunder Bay, Quebec City, and Trois-Rivières, will experience minimal increases of less than $500.

The smallest increases are in Saguenay and Saint John, which are $324 and $300, less than a dollar a year.

“But for regions like Fraser Valley, where affordability was already stretched, these changes represent a more dramatic shift in household budgets,’ says Zoocasa. “This highlights a crucial point for homebuyers: it’s not just about the sticker price of the home. The long-term cost of borrowing can vary widely depending on where you live and how much room you have in your budget when the rates inevitably change.”

A Wave of Mortgage Renewals Coming; Homeowners, Open Your Wallets by Myke Thomas | Western Standard