For years, Canadian homeowners enjoyed some of the lowest mortgage rates in history. If you bought a home or renewed your mortgage between 2020 and early 2022, you likely locked in a rate that felt almost too good to be true.

But the financial landscape has shifted dramatically.

As those low-interest terms expire, a “renewal wave” is hitting the Canadian market. The central question for millions is no longer if their payments will go up, but by how much. Bank of Canada (BoC) data provides a clear and concerning answer: for many, the cost of renewal will indeed be thousands of dollars more per year.

But the impact isn’t uniform. The data highlights specific groups of homeowners who are most at risk of “payment shock.”

The Big Number: $322 to $1,480 More per Month

To understand the scale of the challenge, we need to look at the math. The Bank of Canada’s analysis shows that homeowners renewing in 2025 and 2026 are transitioning from an average contract rate of roughly 3.0% to new rates that are significantly higher.

Even with some recent cooling in fixed-rate yields, the gap remains substantial. For a typical homeowner, this reset will result in an average payment increase of about 15% to 20%.

Let’s look at what that “payment shock” looks like in real dollars, using CMHC data on average payments:

Current Monthly Payment	15% Increase	20% Increase	40% Increase (High-Risk)
$2,086 (2025 Q1 Avg)	$2,399	$2,503	$2,920
Additional Cost/Month	+$313	+$417	+$834
Additional Cost/Year	+$3,756	+$5,004	+$10,008

For many families, an extra $300 to $800 per month isn’t just a budget adjustment it’s a major financial strain that could require sacrificing savings, vacations, or even essential spending.

Who Is Most At Risk? Bank of Canada Confirms 3 Key Groups

While 60% of all outstanding mortgages are expected to renew in 2025 or 2026, certain borrowers face a much steepest path. BoC data and supplementary analysis from CMHC identify who is carrying the most risk:

1. Highly Leveraged Borrowers in Stretched Markets (Toronto & Vancouver)

The single greatest risk factor is leverage how much you owe relative to your income and your home’s value. Borrowers who stretched their budgets to the absolute limit to buy in expensive markets like the Greater Toronto Area (GTA) or Greater Vancouver are the most vulnerable.

• The Specific Risk: CMHC notes that mortgage arrears are rising fastest among highly leveraged buyers in these regions. These are households that have historically low “equity cushions” and high total debt-service ratios. If home prices soften further, they face the combined threat of higher payments and dwindling equity.

2. Variables-Rate, Fixed-Payment Mortgages

During the pandemic, this was a highly popular product. Your monthly payment stayed the same, but as the Bank of Canada raised rates, less of that payment went to the principal, and more went to interest. Eventually, many of these borrowers hit their “trigger rate,” meaning their fixed payment was no longer covering even the interest owing.

• The Specific Risk: At renewal, these borrowers cannot simply renew their current payment. They must reset their payments to cover the full principal and interest over their original remaining amortization. For a segment of these borrowers, this reset could result in a payment jump of more than 40%.

3. Pandemic-Era Fixed-Rate Holders (2020-2022)

Anyone coming off a 5-year fixed rate from 2020 or 2021 is facing the largest rate differential. They locked in at historic lows (often under 2.0%) and will be renewing into a “new normal” that is 2 to 3 percentage points higher.

• The Specific Risk: While they have enjoyed stability for five years, they are now experiencing the full brunt of the rate-hiking cycle all at once. This group represents about 40% of upcoming renewals and will feel the most immediate and significant budget squeeze.

What You Can Do Now: A Proactive Action Plan

If you fall into one of these high-risk groups, or even if your renewal is simply looming, “wait and see” is the most dangerous strategy. You need a proactive plan.

1. Don’t Just Auto-Renew.

Your current lender will send you a renewal offer a few weeks before your term ends. It’s convenient, but it is rarely the best rate available. The simple act of shopping around can save you thousands.

2. Talk to a Mortgage Broker 4–6 Months Early.

A mortgage broker has access to multiple lenders, including credit unions and alternative lenders that you won’t find on the main street. We can run payment scenarios for you, help you stress-test your own budget, and secure a “rate hold” for up to 120 days.

3. Consider Extending Your Amortization (Refinancing).

This is a last-resort tool for managing payment shock. By refinancing your mortgage and spreading the remaining balance over a longer period (e.g., back to 25 or 30 years), you can significantly lower your required monthly payment, even at a higher rate.

• The Trade-off: This increases the total interest you will pay over the life of your mortgage, so it should only be used if cash flow stability is your absolute top concern.

4. Clean Up Your Credit.

To switch lenders or refinance to a better term, you must pass the mortgage stress test. A higher credit score helps. Focus on reducing other debts (credit cards, car loans) and ensure all payments are current in the 6–12 months leading up to your renewal.

Take Control of Your Renewal

The news from the Bank of Canada is a wakeup call, not a cause for panic. By understanding the risks and taking action today, you can navigate your upcoming mortgage renewal with confidence.

Don’t wait for your lender’s letter. Contact us today for a free, no-obligation renewal assessment. Let’s look at your options and find a strategy that fits your budget.