Mar 26, 2026
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Roughly two-thirds of all mortgages renew in 2025 and 2026 (1) — and for many households, that reset will be the single largest financial change they face this year.
While the average payment increase is estimated to be 6%, this masks the monthly mortgage increase faced by many mortgage holders. To assess the impact of rate increases — from the low-rate years of 2020 and 2021 to now — the Bank of Canada did the math. The numbers are sobering.
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For Canadians who locked in at those low rates five years ago, the current mortgage rate environment will mean an average monthly payment increase between 15% to 20% (2). That translates to roughly $5,100 more per year for a typical affected household — or just over $425 more every month (3).
Canadians who currently hold mortgages with RBC can expect even greater payment increases. According to RBC earnings disclosures, the average monthly mortgage payment increase is $513, a jump of 22% (4).
These are not edge cases. Here’s what you need to do before your mortgage renewal date arrives.
Why do Canadians with 5-year fixed-rate mortgages face the steepest jump?
In 2020 and 2021, five-year fixed mortgage rates in Canada dipped to historic lows — some below 2%. Locking in was the obvious and prudent choice. But that five-year clock is now expiring for hundreds of thousands of Canadians, and rates in the current market are two or more times the rate when compared to the last time these homeowners negotiated a mortgage loan.
For instance, a borrower who secured a five-year fixed rate of 1.9% in 2021 and is renewing today may be looking at rates in the range of 4% to 5%, depending on their lender, loan-to-value ratio and credit profile. That gap — two to three percentage points on a $400,000 to $600,000 mortgage balance — can be significant. According to BoC calculations, it translates to an extra $5,000 or more spent on repaying your mortgage loan.
Variable-rate holders, by contrast, have already seen their rates fluctuate. Their payment adjustment at renewal is typically smaller because the gap between what they were paying and current rates is narrower.
Get personalized mortgage options from Homewise. Just one application lets you compare rates from 30+ lenders — getting you the best rate in minutes.
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How much more will you actually pay? Running the numbers
The payment increase you face depends on your remaining balance, your original rate and the term you choose at renewal.
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For instance, if a borrower with a mortgage balance of $450,000 renews at 4.5%, they’ll face a 32% increase in their monthly payment — paying approximately $2,490, compared to $1,884 if they’d renewed at 1.9%.
Some lenders allow borrowers to re-extend an amortization that has been running for several years, effectively resetting the clock. It lowers the monthly payment but increases total borrowing costs.
Making a lump-sum prepayment before renewal — if your mortgage contract allows it — is another option. This prepayment reduces how much you need to borrow, which reduces the monthly payment and the overall interest paid.
5 things to do before your mortgage renews
The renewal process gives borrowers more leverage than many realize — but only if they act early.
- Know your renewal date. Contact your lender today if you don't know when your term expires. Mark it clearly; everything else depends on it.
- Request a renewal offer from your current lender at least 120 days before expiry. You are under no obligation to accept that first offer.
- Get a rate hold from your current lender or a mortgage broker. Most lenders will lock in a rate for 90 to 120 days. If rates fall before renewal, you can take the lower rate. If they rise, you're protected.
- Compare offers from at least three lenders using a mortgage broker. Switching lenders at renewal does not trigger a penalty and can reduce your rate by a meaningful margin.
- If the new payment is unmanageable, speak to your lender about extending your amortization period. It is not ideal from an interest-cost standpoint, but it can make the payment workable while you adjust.
Skip the bank-hopping. Let Homewise do the shopping for you. Access rates from 30+ lenders with one simple application and find your best fit instantly.
Final thoughts
The wave of mortgage renewals — and the impact higher rates will have on Canadian budgets — isn’t a theory. It’s happening. Canadians who act early, compare offers and understand their options will be far better positioned than those who accept the first renewal letter that arrives in the mail.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Bank of Canada: Staff Analytical Note (1, 2, 5); Ratehub.ca (3); RBC Earnings Disclosure (4)
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
