More than half of Canadians set to renew their mortgages in 2025 expect to see their monthly payments rise, according to a new Royal LePage survey, with a vast majority of them saying the increase will put financial strain on their households.
The survey of 1,340 Canadians who are set to renew their mortgages this year, conducted by Leger Opinion, found that 57 per cent expect their monthly payments will increase upon renewal. Of those expecting to face higher monthly payments, 81 per cent say the rise will put a financial strain on their households, with 34 per cent reporting that the strain will be “significant.”
The survey also found that 25 per cent of Canadians expect their monthly payments to stay approximately the same (within $100 per month), while 15 per cent expect to see their monthly payments decrease.
“When it comes to post-pandemic mortgage renewals, many Canadians have avoided the worst-case scenario of having to sell their homes due to the inability to cover the cost of their mortgage, thanks to solid employment trends and declining interest rates,” Phil Soper, Royal LePage’s president and CEO, said in a statement.
“Nevertheless, some will face a substantial rise in their mortgage costs, putting added pressure on their household finances.”
There are approximately 1.2 million fixed-rate mortgages up for renewal in 2025, according to the Canada Mortgage Housing Corporation, with 85 per cent signed when the Bank of Canada’s benchmark interest rate was at or below one per cent. While the Bank of Canada aggressively hiked interest rates in response to surging inflation, since last June, the central bank has been slashing its benchmark rate, bringing some relief to those gearing up for renewal and concerns about the economic impact of the mortgage renewal shock. Still, many are bracing for financial strain.
The survey found that of those expecting to face financial difficulties upon renewal, 60 per cent plan to reduce or eliminate discretionary spending. Another 43 per cent say they will reduce travel and vacationing, while 36 per cent say they will eliminate saving and investing (respondents were able to pick more than one answer.)
“Even in challenging financial times, Canadians continue to prioritize home ownership and paying down their mortgages – cutting back on other spending, and even savings, if absolutely necessary,” Soper said.
While many are planning on changing their spending habits, few are considering more drastic measures such as downsizing or moving. The survey found that 62 per cent of respondents are not considering changes to their living arrangement. Eleven per cent are considering moving to a more affordable region, 10 per cent are considering downsizing their home, and another 10 per cent are thinking about renting out part of their home to help with mortgage expenses.
