TD: Despite the renewal pressures for many households, mortgage payment trends have been reduced
According to a new report by TD Economics, more and more Canadian families in Canada feel that mortgage renewals are in trouble, but the overall pressure on the system may not be as terrible as the headlines suggest.
Economist Maria Solovieva said that while many borrowers are absorbing higher monthly payments, the situation in the country shows a decline in mortgage payment trends, thanks to changes in early relief and interest rate dynamics for some borrowers.
Why mortgage payments are falling despite increased renewal
“It may be surprising to learn that total mortgages in Canada are actually falling,” Solovieva wrote in a research note released on Wednesday. “Let’s unravel how both dynamics can be implemented at the same time.”
She noted that by the end of 2026, about 60% of outstanding mortgages will be renewed, and 40% of mortgages may do so at a higher rate. For example, those with a $500,000 mortgage lockdown 2.5% in June 2020 will now update to nearly 4.0%, increasing their monthly payments by about $320.
However, Solovieva explained that state mortgage payments are based on total USD, not household counts. This means that large borrowers have huge effects. Many of the people who have mortgaged loans have withdrawn variable interest rates or short-term fixed loans in the peak interest rate environment in 2023 and are now seeing meaningful relief, Solovieva said.
“In the last two quarters of last year, mortgage payments fell by an average of 1.7%, providing adequate relief to push total mortgage payments to a contraction,” the report said.
TD estimates that more than one-third of the upcoming renewals belong to this “early relief” group, with payments for those with one-year or variable ratings mortgages falling significantly as Canadian banks begin to ease in mid-2024.
Who is still at risk
However, not all borrowers renew their contracts better. Solovieva noted that 40% of contract renewals will come from the cohort that locks in ultra-low rates in 2020 and 2021. These borrowers are more likely to face increased payments, especially during peak renewals in late 2025 and early 2026.
The report said that given that Canadian homeowners are entering the cycle with more equity and savings, the panic has not been guaranteed.
Since the beginning of 2020, the national housing price index has grown by 25%, household financial assets have risen by 45%, and liquid deposits have risen by 42%. Disposable income of mortgage borrowers also increased by 27%.
“These facts suggest that many homeowners have the flexibility to mitigate the increased monthly payments, which is through extended amortization, refinancing or advance payments,” Solovieva wrote.
But there are still risks, especially for low-income borrowers and high-cost areas. TD expects unemployment to reach 7.3% in the fourth quarter of 2025, as does the renewal of the low-interest cohort.
“In the past five years, [lower-income borrowers’] Debt growth outweighs the gains of income, making payments, job losses or both more vulnerable. ”
Ontario and British Columbia have a higher average mortgage balance and have shown a pace of increased crime.
For non-mortgage borrowers, this image is still disturbing. Although these debts account for only 25% of household debt, they account for 45% of debt maintenance costs. Many of these products have shorter terminology and higher rates, which pushes the default settings.
“The ongoing pressure on debt services has put a key limit on consumer spending growth,” Solovieva warned. “All in all, it’s hard for consumers to develop spring in their steps.”
Visited once today, visited once today
Maria Solovieva Mortgage mortgage renewal payment impact renewal rate renewal TD TD Economics
Last modified: July 9, 2025
