Homeowners expect monthly mortgage payments to rise upon renewal in 2025: survey

Royal LePage has new data about how many homeowners continue to anticipate higher mortgage payments ahead. Phil Soper explains.

TORONTO — As more than one million mortgages come up for renewal in Canada this year, a new survey says the majority of those homeowners expect to pay more in their monthly borrowing costs.

A Royal LePage survey released Thursday, conducted by Hill & Knowlton, said 57 per cent of Canadians set to renew a mortgage on their primary residence this year expect their monthly payment to increase.

That includes 22 per cent who expect it to rise “significantly” and 35 per cent who think their payment will go up “slightly.” One-quarter said their monthly mortgage payment will remain about the same and 15 per cent expect it to decrease upon renewal.

Royal LePage said 1.2 million mortgages are up for renewal in 2025. Around 85 per cent of those were secured when the Bank of Canada’s key policy rate sunk to historically low levels — at or below one per cent — during the COVID-19 pandemic.

“We’re now five years from when those mortgages first became available so we’re getting those rolling over,” said Royal LePage president and CEO Phil Soper in an interview.

“While rates have been coming down rapidly, they’re still well above what those super low pandemic mortgages were and people are concerned.”

Among those who expect their monthly payment to rise, 81 per cent said the increase would put financial strain on their household. Many of those said they will reduce discretionary spending such as on restaurants and entertainment, or cut back on travel to help cope with the increased costs.

Meanwhile, 10 per cent of respondents said they are considering downsizing, relocating to a more affordable region or renting out a portion of their home in response to higher borrowing costs.

Soper said a potential trade war with the U.S., and the harm the Canadian economy could endure from President Donald Trump’s threat of 25 per cent tariffs, is adding to Canadian homeowners' anxiety.

However, he said the Bank of Canada could loosen monetary policy in response to tariffs in order to ease the burden on the economy.

“We’ll see rates dropping, and we potentially could see unemployment picking up,” he said.

“We could see GDP trending downward, and at the same time because our industry is so rate sensitive, all that pent-up demand we have from the post-pandemic market correction ... could be unleashed based on very low borrowing costs.”

While most households with pending renewals plan to maintain the same type of mortgage product they have, the report said more Canadians are exploring the option of signing variable-rate mortgages.

Around two-thirds of respondents with a mortgage renewing this year said they plan to obtain a fixed-rate loan upon renewal, down from the three-quarters who currently have fixed-rate mortgages. Around 29 per cent said they will choose a variable-rate loan, up from the 24 per cent who currently have variable-rate mortgages.

Around 37 per cent of all respondents said they plan to go with a five-year mortgage term upon renewal, while 19 per cent intend to sign on to a three-year term.

Soper said Canadians tend to gravitate toward five-year fixed-rate mortgages, but that option “doesn’t always make sense.”

“If you’re in a period of clearly declining interest rates, as we have been for about a year now, it really doesn’t make a lot of logical sense to lock in for the longer term,” he said.

Last fall, Canada’s national banking regulator announced it would no longer require borrowers with uninsured mortgages to undergo a stress test when switching providers, as long as the amortization schedule and loan amount remain unchanged.

While a six-month variable-rate mortgage might be more expensive in the short-term, Soper said some households might believe that option will be more affordable down the road, since they could be able to lock in a lower interest rate in the future.

“You have got to be able to afford the shorter-term variable-rate mortgage, but if you can, it’s just making a lot of sense,” he said.

This report by The Canadian Press was first published Feb. 20, 2025.

Sammy Hudes, The Canadian Press