By Sammy Hudes
A Royal LePage survey launched Thursday, performed by Hill & Knowlton, mentioned 57% of Canadians set to resume a mortgage on their main residence this 12 months count on their month-to-month cost to extend.
That features 22% who count on it to rise “considerably” and 35 per cent who suppose their cost will go up “barely.” One-quarter mentioned their month-to-month mortgage cost will stay about the identical and 15% count on it to lower upon renewal.
Royal LePage mentioned 1.2 million mortgages are up for renewal in 2025. Round 85% of these have been secured when the Financial institution of Canada’s key coverage fee sunk to traditionally low ranges — at or under one per cent — throughout the COVID-19 pandemic.
“We’re now 5 years from when these mortgages first turned accessible so we’re getting these rolling over,” mentioned Royal LePage president and CEO Phil Soper in an interview.
“Whereas charges have been coming down quickly, they’re nonetheless effectively above what these tremendous low pandemic mortgages have been and individuals are involved.”
Amongst those that count on their month-to-month cost to rise, 81% mentioned the rise would put monetary pressure on their family. Lots of these mentioned they may scale back discretionary spending similar to on eating places and leisure, or reduce on journey to assist address the elevated prices.
In the meantime, 10% of respondents mentioned they’re contemplating downsizing, relocating to a extra inexpensive area or renting out a portion of their house in response to increased borrowing prices.
Soper mentioned a possible commerce warfare with the U.S., and the hurt the Canadian financial system may endure from President Donald Trump’s risk of 25% tariffs, is including to Canadian householders’ nervousness.
Nevertheless, he mentioned the Financial institution of Canada may loosen financial coverage in response to tariffs with the intention to ease the burden on the financial system.
“We’ll see charges dropping, and we doubtlessly may see unemployment choosing up,” he mentioned.
“We may see GDP trending downward, and on the similar time as a result of our business is so fee delicate, all that pent-up demand we now have from the post-pandemic market correction … might be unleashed primarily based on very low borrowing prices.”
Whereas most households with pending renewals plan to take care of the identical sort of mortgage product they’ve, the report mentioned extra Canadians are exploring the choice of signing variable-rate mortgages.
Round two-thirds of respondents with a mortgage renewing this 12 months mentioned they plan to acquire a fixed-rate mortgage upon renewal, down from the three-quarters who at present have fixed-rate mortgages. Round 29% mentioned they may select a variable-rate mortgage, up from the 24% who at present have variable-rate mortgages.
Round 37% of all respondents mentioned they plan to go along with a five-year mortgage time period upon renewal, whereas 19% intend to signal on to a three-year time period.
Soper mentioned Canadians are likely to gravitate towards 5-year fixed-rate mortgages, however that choice “doesn’t all the time make sense.”
“For those who’re in a interval of clearly declining rates of interest, as we now have been for a few 12 months now, it actually doesn’t make a variety of logical sense to lock in for the long term,” he mentioned.
Final fall, Canada’s nationwide banking regulator introduced it could not require debtors with uninsured mortgages to bear a stress take a look at when switching suppliers, so long as the amortization schedule and mortgage quantity stay unchanged.
Whereas a six-month variable-rate mortgage is perhaps dearer within the short-term, Soper mentioned some households may consider that choice will likely be extra inexpensive down the street, since they might be capable to lock in a decrease rate of interest sooner or later.
“You’ve got to have the ability to afford the shorter-term variable-rate mortgage, however should you can, it’s simply making a variety of sense,” he mentioned.
This report by The Canadian Press was first printed Feb. 20, 2025.
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Final modified: February 20, 2025
