Renewing your five-year mortgage term? Expect to pay 15% more per month
Ratehub.ca 2025 mortgage renewal stats
The slump that has defined real estate sales thus far in 2025 is showing up in mortgage shopper data, according to a recent analysis by Ratehub.ca.
According to internal rate shopper inquiries, demand for rates for new home purchases has dropped significantly to just 47%, compared to 71% over the same time frame in 2024. Meanwhile, inquiries for mortgage renewal rates have ticked up, now accounting for 39% of all mortgage rate inquiries on the site, compared to 22% last year.
That Canadians seem less keen to jump into the housing market isn’t a huge surprise; tariff-induced economic uncertainty and growing fears of a recession have effectively cooled what should have been a robust spring real estate season. According to the latest numbers from the Canadian Real Estate Association, national home sales plunged to a 16-year low in March.
Fewer new home purchases, more renewals
However, the wave of mortgage renewals is just starting to pick up; while April 2020 home sales were down due to the early shocks of the COVID-19 pandemic, they had dramatically increased by June as locked-down buyers started to clamour for more space and properties outside of city centres. According to the 2025 Financial Stability Report (FSR) released by the Bank of Canada (BoC), 60% of all outstanding mortgages in Canada are set to renew this year and next; of those, 60% will see their payment increase when they do due to today’s higher interest rate environment.
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That means today’s mortgage shopper is especially cost motivated, and is looking to ease the impact of higher interest rates on their budget; to illustrate, today’s lowest five-year fixed mortgage rate of 3.84% still sits a total of 170 basis points above the 2.14% that was available in May 2020. While rates have eased considerably from the 5.49% peak reached in October 2023, households will still need to absorb the difference in their monthly mortgage payments.
“While interest rates have come down significantly over the past year, previous increases in interest rates are still affecting mortgage renewals,” states the BoC’s FSR. “A large share of mortgages being renewed this year or next were taken out during the pandemic at historically low interest rates. Despite rates being much lower than they were 12 months ago, most of these households will still see payment increases when they renew.”
In fact, according to Ratehub.ca's mortgage payment calculator, a homeowner who put a 10% down payment on a $488,000* home in April 2020 with a 5-year fixed rate of 2.14% (amortized over 25 years with a total mortgage amount of: $452,815) would have had a monthly mortgage payment of $1,948.
When renewing in April 2025, they would have a mortgage balance of $380,438, a 5-year fixed rate of 3.74% (April’s best renewal rate) and a new monthly mortgage payment of $2,248.
This means that the homeowner will pay $300 more per month (a 15% increase) or $3,600 more per year on their mortgage payments.
*April 2020 average home price in Canada was just over $488,000 (CREA)
**Data note: The first four months of the year were used – January, February, March, April 2025. These same months were used for the 2024 comparison.
- Did you know: You don't have to renew with your lender? You can usually get a lower rate by switching at renewal. Your existing lender has less incentive to provide you with the most competitive rates, as they already have your mortgage business. Auto-renewing means leaving money on the table.
- You could save $13,857 on average by switching with Ratehub.ca vs renewing with your bank. Speak to a Ratehub.ca mortgage agent today to see how easy switching can be.
- Switching comes with cash bonuses of up to $4,000 - that could buy you a vacation!
- Get access to exclusive insurance discounts when you have a Ratehub.ca mortgage.
Rising variable-rate demand
According to the data, there was also a slight shift in the type of rate borrowers preferred; inquiries for five-year variable-rate mortgages increased to 8%, compared to 5% in 2024.
This was largely due to variable rates dropping since June 2024, when the BoC kicked off its rate cutting cycle, lowering its overnight lending rate by a total of 225 basis points via seven consecutive decreases. That’s taken considerable pressure off floating-rate borrowers. However, as variable rates remain elevated compared to 2020 levels, and generally higher than five-year fixed-rate terms, consumer demand for them hasn’t increased significantly. Fixed rates, meanwhile, continue to dominate the market, accounting for 77% of all inquiries, though down from 83% in 2024.
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Three-year terms are increasingly popular
Ratehub.ca’s numbers also reveal an uptick in demand for shorter fixed-rate mortgages, such as three-year terms; the number of inquiries for these increased to 12%, compared to 7% in 2024.
Ongoing market volatility is the culprit here, causing borrowers to seek out rate options with built-in flexibility. A shorter fixed-rate term has been a popular solution for borrowers to avoid the rate hikes that took place over 2023 and 2024, with the ability to change their mortgage features and rate sooner than if they had locked in with a five-year term.
Refinance inquiries have doubled
The number of inquiries for mortgage refinances – the act of breaking your mortgage and switching to a new rate and term – also doubled over the past year, rising to 12% from 6% in 2024.
Again, this reflects the strain many households are facing due to higher interest rates; as borrowing costs have lowered over the past year, borrowers may find it’s worth it to pay a penalty to break their mortgage and take out a lower rate. Overall financial pressures may have also prompted households to pull equity out of their homes to aid in cash flow.
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Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.