The New Year is just around the corner and for 1.2 million mortgage holders in Canada that means it’s almost time to renew their home loans.
According to a report released by the Canada Mortgage and Housing Corporation (CMHC) last month, 85 per cent of the mortgages up for renewal in 2025 were signed back when the Bank of Canada’s interest rate was at or below one per cent.
That means at least 1.05 million homeowners with a mortgage will soon face a renewal at “significantly higher interest rates,” which the report notes is a “concern” for the Canadian economy.
The BoC has made four consecutive cuts to its key interest rate since 2024 started, as inflation remains within its one to three per cent target, after spiking to 8.1 per cent in June of 2022.
The overnight rate now sits at 3.75 per cent, down from five per cent, where it stayed for nearly a year.
And while the current, relatively low, rate may be good news for first-time home buyers getting into the market now, it’s a far cry from the 0.25 per cent on offer during the pandemic.
The CMHC says mortgage delinquency rates — when mortgages are more than 90 days past due — crept up to 0.19 per cent in the second quarter of 2024, marking an increase from a record low of 0.14 per cent in 2022. Auto loans, credit cards, and lines of credit — which the CMHC says are indicators of future late mortgage payments — have also recorded delinquency rate increases over the same period.
Although the national housing agency notes mortgage delinquency rates remain below pre-pandemic levels and below averages seen since 1990, they expect “further increases” in 2025.
“Household debt remains a vulnerability for the Canadian economy,” the group noted in a supplementary news release. “Mortgage debt has grown faster than inflation. A large number of mortgages are up for renewal in 2025 and 2026, with many borrowers facing higher interest rates than when their terms began, potentially exacerbating financial pressures.”
Is the mortgage on your Ontario home up for renewal in 2025? If so, how much more do you expect to pay per month? How will your life change under the higher payments? Will you still be able to make your payments?
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