Canada is experiencing the largest wave of mortgage renewals on record, and a fresh survey reveals that the burden on many borrowers is climbing sharply. The study, commissioned by Rates.ca and carried out by Leger between 24 and 26 July 2024, found that 82 per cent of homeowners who renewed their mortgages since January faced higher borrowing costs.
Mortgage renewal trends
Most respondents reported rate increases between two and 4.99 per cent. As a result, 45 per cent say their mortgage payments now consume half or more of their total household budget. Financial experts typically advise keeping housing expenses, including utilities, below 30 per cent of gross income. Royal Bank of Canada echoes that guidance on its website, recommending a ceiling of 30 to 32 per cent for principal, interest, property taxes, heating and condo fees.
Young owners felt the squeeze most acutely. Nine in ten borrowers aged 18 to 34 reported higher rates, and 56 per cent of that group said housing now accounts for 50 to 70 per cent of their budget. Immigrants experienced a similar strain, with half to seventy per cent of their income devoted to housing, compared with 35 per cent for Canadian‑born owners.
When it comes to term length, 40 per cent of renovators chose a five year lock‑in, 35 per cent opted for three years, and only seven per cent extended beyond five years.
Advice for homeowners
"These findings show just how little financial flexibility some homeowners have after renewing," said Victor Tran, mortgage and real‑estate expert at Rates.ca. "When half or more of a household's monthly budget goes toward the mortgage, there is far less room to absorb other expenses or an unexpected financial setback."
Tran recommends that borrowers begin comparing options at least 120 days before their renewal date. This window allows time to evaluate rate, term, amortisation and flexibility that best match the household's cash flow.
For Canadians facing tighter budgets, early market research and a willingness to consider shorter terms or alternative lenders could mitigate the impact of rising rates as the renewal cycle continues into 2025.
Based on reporting by Global News.