Why Rob Carrick wants you mortgage-free before you retire — and what rising interest rates have to do with it

For anyone within sight of retirement, the question now is should you keep investing every spare dollar, or work hard to pay down the mortgage first? For veteran personal finance writer Rob Carrick there’s a clear answer to this dilemma, and his reasoning is worth unpacking before your next renewal — or retirement party.

Why are mortgage rates rising when the economy is weak?

Carrick is a personal finance expert and former staff columnist at The Globe and Mail. In a recent guest column for the national newspaper, he argues that rising interest and mortgage rates make paying off your mortgage a pre-retirement priority.

And, no, it’s not for the usual reasons.

As Carrick states, Canada has a struggling economy and, typically, this would result in the lowering of rates; however, persistent inflation and a volatile bond market are having the exact opposite effect and, as a result, rates are being pressured to rise.

In recent weeks, fixed mortgage rates have followed government bond yields — and bond yields have jumped this year amid worries that governments and artificial-intelligence-focused companies are borrowing too much. By Carrick’s count, rates on the 3-year fixed mortgage rose from a low of about 3.9% to about 4.6%.

Variable-rate borrowers aren’t safe either. If inflation lingers, Carrick says the Bank of Canada could face pressure to raise its benchmark rate. It’s what happened in 2022 to 2023. And the BoC’s next rate decision is Oct. 28, 2026.

Why does a renewal hurt retirees more than workers?

When you’re working, a bigger mortgage payment stings, but a raise, bonus or new job can help absorb this additional cost. For retirees and Canadians who rely on government assisted benefits, earnings from investment portfolios, or savings, absorbing this extra cost means budget-trade-offs or spending more of your savings.

To illustrate, let’s assume a couple renews a $250,000 mortgage balance with 15 years left on the amortization. At 3.9%, the monthly payment is roughly $1,833. At 4.6%, it’s about $1,920. That’s around $87 more a month, or just over $1,000 a year.

If that money comes out of a RRIF, it’s taxable, so you’d need to withdraw more. If you were in the 25% tax bracket, that would mean withdrawing $1,333 from your RRIF in order to cover that extra mortgage expense. And those RRIF withdrawals are taxable and could threaten to push some retirees closer to the OAS clawback.

There’s an emotional cost, too. Carrick points out that retirement removes work stress, and a mortgage you know will cost more on renewal can bring some of that stress right back.

How many Canadians are retiring with a mortgage?

More than you might think. Data from Statistics Canada shows that average mortgage debt for households led by someone 65 or older rose about 40% between the second quarter of 2020 and the end of 2025.

The 2026 Fidelity Retirement Report, from investment manager Fidelity Investments Canada, found that 51% of pre-retirees and 22% of retirees carry a mortgage. According to Carrick, fewer than half of those retirees expect to be mortgage-free within 10 years.