Renewing your mortgage in 2026? Here’s what to expect

This blog post is part of an annual series. Read the 2025 edition here.

Are you among the 1 million Canadians looking to renew your mortgage in 2026? It may seem a daunting prospect to do so this year, given interest rates are likely higher than when you first took out your mortgage. Recent economic upheaval – thanks to ongoing tariff uncertainty – have also clouded the financial picture for many.

Here’s what those navigating the so-called mortgage renewal wave can expect this year – and how to hone their borrowing strategies to be most financially advantageous.

Higher renewal rates will mean steeper monthly payments in 2026

We’re in a considerably different rate environment than when many pandemic-era borrowers first took out their mortgages – and they’re definitely feeling the pressure. According to the Canada Mortgage and Housing Corporation’s (CMHC) 2026 Housing Market Outlook, 1.5 million households have already renewed their mortgage at a higher interest rate in 2025.

That’s been particularly painful given rates were at record lows during the early years of the pandemic. In February 2021, the lowest five-year variable mortgage could be had at a rate of 0.99%, and the lowest five-year fixed at 1.39%. This ultra-low pricing was a method used by the Bank of Canada to help the economy weather the shock of the COVID lockdowns.

However, those safeguards were swiftly rolled back once lockdowns ended and inflation spiked. 

Today, rate pricing is roughly 230 basis points higher, at 3.35% for a five-year variable, and 3.69% for a five-year fixed (there are 100 basis points in a percentage point). While these rates are comparably good from a historical perspective – and certainly more attractive than the high 5’s in late 2023 and 2024 – they mean renewing borrowers will shell out hundreds of dollars more in monthly mortgage payments. 

For example, using Ratehub’s Mortgage Payment Calculator, let’s take a look at the payment required on an insured five-year fixed $500,000 mortgage. At a rate of 3.69%, a borrower would pay $2,516 per month. Now, let’s say they’re renewing from a rate of 1.39%; they would have been paying just $1,949 – a difference of $567 more per month. A separate Ratehub analysis also found that, on average, most fixed-rate borrowers will see their payment increase by 26% at renewal time.

Variable mortgage borrowers, meanwhile, have already absorbed most of this payment increase, as their rate – or portion of payment servicing interest – fluctuates alongside the Bank’s benchmark overnight lending rate. When this group renews, they’ll be looking at an average payment increase of 4% monthly.

Watch: 3 tips for renewing your mortgage in 2026

Don’t count on deeper rate discounts

Those hoping for additional rate cuts in 2026 are likely to be disappointed; recent economic and inflation data have indicated the BoC will probably keep its rate unchanged for the time being. 

According to the BoC’s own fourth quarter 2025 Market Participant Survey – which polls a selection of representatives from the banking, research, and asset-management industries – all respondents expect a central bank rate hold throughout 2026, with the 75th percentile of respondents expecting two rate hikes in 2027 - bringing it back up to 2.75% from the current 2.25%.

They also expect a steeper trajectory for bond yields, which mortgage lenders use as the basis for fixed mortgage rate pricing. The 75th percentile of respondents expect that 5-year Canadian bond yield (which sets five-year fixed-rate pricing) to rise by 3.19% by the end of 2026, and up to 3.41% by the end of 2027. Given that the five-year bond yield has hovered in the 2.8% range since December, that would put upward pressure on fixed mortgage rates.

Mortgage renewal is a time to shop around – and reassess

If you’re coming up for mortgage renewal, it’s important to take early action.

As rates are more likely to rise this year than fall, those shopping for a mortgage rate should take out a pre-approval and rate hold as soon as possible to secure access to today’s pricing. Getting a rate hold with a lender means you’re guaranteed (pending full approval) a certain rate, often up to 120 days. If rates rise during this time period, you won’t be impacted, and if they fall, the lender will usually match you with the lowest available price when it comes time to lock in.

Mortgage renewal is also an optimal time to make a change, without having to pay any penalties. Moving to a new lender at this time can be an effective way to get an even lower rate – all the more needed in a higher rate environment.

A few tried and true tips for renewing borrowers:

Resist the urge to sign your existing lender’s renewal letter: Some time before your renewal date – up to three months in advance – your current mortgage lender will send a letter offering you a new mortgage rate for your renewal. But beware signing this document! Once you do, the new rate will take effect immediately, even if there’s a few months to go before your actual renewal date. Given most borrowers must renew at a higher rate today than they originally got, that means missing out on a few remaining payments at a lower rate.

Shop around: Be aware that as an existing client, you’ll almost never be offered a market-leading rate, as those are typically reserved for new business. Shop the market, or work with a pro like a mortgage broker to understand what rates are available to you in the Canadian marketplace. Some lenders even offer cash back for switching!

Re-evaluate your mortgage’s features: Renewal time is an opportunity to switch things up – such as refinancing to access equity, switch from a fixed to variable, or try a new term length – without incurring a penalty to break your mortgage mid-term.

Worried about renewing? There are resources available

The reality is, there are few households that can absorb paying hundreds more per month on their mortgage, and the evidence is already showing up in Canadian credit behaviour. According to the CMHC, people are saving less, reducing their discretionary spending, and are taking on other forms of debt to get by. 

The number of higher-risk borrowers has steadily grown since 2021, and so is the number of those who are in arrears on their mortgages (missing their payments by 90 days or more). This has been especially apparent in expensive markets like Vancouver and particularly in the Greater Toronto Area, where it has quadrupled over the past year. The CMHC says this is due to a combination of poor affordability, weak job market, and struggling investment within the condo market. First-time home buyers, overly-leveraged borrowers, and those who purchased at the height of the pandemic real estate bubble are the hardest hit.

The good news is that, overall, the number of borrowers in this position remains very low – just 0.26% of all mortgages in the GTA, and 0.22% nationally (up seven basis points from 2023). While this is a notable uptick, it’s much less pronounced than the feared “renewal cliff” economists were forecasting in late 2023.

There are also supports in place for those who are concerned they won’t keep up with their renewal mortgage payments. In fact, lenders are expected to provide guidance and measures to keep borrowers afloat in the face of financial difficulty, as outlined in the FCAC’s Mortgage Charter. 

One common method is to temporarily extend your amortization period – the overall amount of time it takes to pay your mortgage in full – beyond 25 or 30 years to reduce the size of your monthly payments.

This method has been increasingly used over the past year, says the CMHC. However, borrowers need to weigh the costs of carrying their mortgage for a longer timeframe, as that means more total interest paid over its lifetime, and staying in debt for longer.

The key here is to communicate with your lender early, in order to explore your options and create a plan. This will protect the impact to your credit, keep you on track with your mortgage payments, while still building equity – an important buffer against navigating future market changes.

Also read:

• Your ultimate mortgage renewal guide
• Programs to help first-time home buyers in Canada
• Canada’s best mortgage renewal rates
• What can mortgage borrowers expect in 2026? 5 predictions