More than 1 million Canadian mortgages are due for renewal in 2025. What if yours is one of them?

The new year is just around the corner, and for 1.2 million mortgage holders in Canada, that means it’s time to renew their home loans.

According to a report released by the Canada Mortgage and Housing Corporation (CMHC) last month, 85 per cent of mortgages due for renewal in 2025 were signed when the Bank of Canada interest rate was at or below one per cent.

That means at least 1.05 million homeowners with mortgages will soon face “significantly higher interest rates,” which the report notes is “troubling news” for the Canadian economy. The Bank of Canada has cut its key interest rate four times in a row since the start of 2024 as inflation remains within its one-to-three percent target after jumping to 8.1 percent in June 2022.

The Bank of Canada’s key rate is now 3.75 percent, down from the five percent it has been at for nearly a year.

And while the central bank’s current, relatively low rate may be good news for first-time homebuyers entering the market now, it’s a far cry from the 0.25 percent it was at during the pandemic.

CMHC reports that the mortgage delinquency rate (where payments are more than 90 days late) rose to 0.19 percent in the second quarter of 2024, up from a record low of 0.14 percent in 2022. Auto loans, credit cards, and lines of credit (which CMHC says are indicators of future mortgage defaults) also saw delinquency rates rise over the same period.

“Household debt remains a vulnerability for the Canadian economy,” the group noted in a follow-up press release. “Mortgage debt has grown faster than inflation. A large number of mortgages are due for renewal in 2025 and 2026, with many borrowers facing higher interest rates than they did at the start of their terms, potentially exacerbating financial pressures.”

Is your home’s mortgage due for renewal in 2025? Talk to your mortgage broker ahead of time to develop the right plan for your specific situation.