The 2026 National Pivot: From Rate Cuts to Renewal Reality
Canadian Mortgage Renewals 2026
As Canada enters 2026, the national real estate conversation is shifting. While 2025 was defined by the Bank of Canada lowering its policy rate to 2.25%, 2026 will be the year millions of households face the “payment shock” of renewing pandemic-era mortgages at today’s higher rates.
The $500/Month Squeeze: The Great Renewal Wave
Approximately 60% of all outstanding mortgages in Canada are scheduled for renewal in 2025 and 2026.
- Consumer Spending Impact: This “squeeze” is expected to act as a drag on the broader national economy, potentially slowing GDP growth to roughly *1.2% in 2026 as families reallocate discretionary spending toward mortgage debt.
- The Pandemic Hangover: The most significant impact will be felt by those who locked in five-year fixed rates between *2.5% and 3.0% during the 2020–2021 market peak.
- The Payment Shock: These homeowners are now facing renewal rates between **4.4% and 4.8%. For a typical *$500,000 mortgage*, this equates to a payment jump of roughly *$500 per month*, or $6,000 annually—a near *20% increase in housing costs.
National Inventory and the “Locked” Market
Despite lower interest rates, the national market remains in a cautious “holding pattern” as of late 2025.
- Balanced Territory: The national sales-to-new-listings ratio (SNLR) sits near *52.7%, signaling a balanced market that neither fully favors buyers nor sellers.
- Rising Supply: There were roughly *173,000 properties listed for sale across Canada at the end of November 2025, an 8.5% increase year-over-year.
- Price Stagnation: National home prices fell slightly in late 2025, with the aggregate benchmark price sitting *20% lower than the historic March 2022 peak.
The 2026 Forecast: A Gradual “Reset”
Major financial institutions and real estate associations project that 2026 will be a year of recovery, though growth will be modest compared to previous cycles.
| Metric | 2026 National Forecast |
|---|---|
| Sales Activity | Projected to see an average boost of 7.7% as pent-up demand returns. |
| Aggregate Price | Forecasted to rise by a modest 1.0% to 5.0% nationally. |
| Interest Rates | Consensus suggests rates have bottomed at 2.25%, with potential upward moves by mid-to-late 2026. |
| Affordability | Expected to improve as wages continue to climb and borrowing costs stabilize. |
Regional Divergence: A Tale of Two Canadas
While the national outlook is stable, the recovery will not be uniform.
- The Strength: The *Prairies and Quebec are forecast to outperform the national average. Cities like Quebec City are projected to see gains of up to 12.0%, while the Prairies continue to benefit from tighter supply and better relative affordability.
- The Struggle: High-priced markets in *Ontario and British Columbia are expected to remain sluggish due to extreme affordability barriers and high condo inventory. In Toronto, aggregate prices are forecast to decline by 4.5% in 2026.
Summary: The Bottom is In
The general consensus among economists is that the “reset” is now behind us. While the 2026 mortgage renewal wave will test household resilience, the stabilization of borrowing costs and improved entry points for first-time buyers are expected to draw Canadians back into the market step by step.
2026 Renewal Cycle FAQs
Contact us to discuss your options or get connected with our recommended mortgage brokers.
How much will my mortgage payment increase in 2026?
If you took out a mortgage in 2021 at ~2% interest, you could see your monthly payments increase by 20% to 40% upon renewal in 2026, assuming rates settle in the 4-5% range. The exact amount depends on your remaining principal and whether you extend your amortization.
Do I have to pass the “Stress Test” again when I renew?
If you stay with your current lender, you typically do not need to re-qualify or pass the stress test. However, if you switch lenders to get a better rate, federal rules currently require you to pass the stress test again at the new qualifying rate.
Can I extend my amortization to lower my payments?
In many cases, yes. If your renewal payment is too high, many lenders will allow you to extend your amortization back to 25 or 30 years. This lowers your monthly payment but increases the total interest you will pay over the life of the loan.
Should I choose a fixed or variable rate in 2026?
This depends on the economic forecast at the time. If rates have peaked and are trending down, a variable rate might save you money. However, if you need budget certainty after a large payment shock, a short-term fixed rate (2-3 years) is often a popular strategy to ride out the volatility.
What if I can’t afford the higher renewal payment?
Do not wait until your renewal letter arrives. Contact your lender or a mortgage broker 4-6 months early. You may be able to make a lump-sum payment now to lower the principal, refinance to extend the amortization, or shop around for a lender with more flexible terms.
Find Local Guides & Market Insights
📍 Calgary 📍 Edmonton 📍 Halifax 📍 Hamilton 📍 Kelowna 📍 Kitchener-Waterloo 📍 London 📍 Montreal 📍 Ottawa 📍 Quebec City 📍 Regina 📍 Saskatoon 📍 Sherbrooke 📍 St. Catharines-Niagara 📍 St. John’s 📍 Toronto 📍 Vancouver 📍 Victoria 📍 Windsor 📍 Winnipeg
