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

Last updated on October 23, 2026. This blog post is part of an annual series. Read the 2025 edition here.

2026 is not a great time to renew a mortgage. Mortgage rates are roughly two-and-a-half percentage points higher than they were five years ago, and they’re creating higher monthly payments at a time when everyday expenses are accelerating. 

A homeowner who scored a 1.79% five-year fixed rate in 2021, for example, could face a payment increase of $685 per month.  

Don’t be intimidated by the frightening payment increases. You can still complete a successful mortgage renewal. Understanding the renewal process and your options as a borrower is the first step to aligning your new mortgage with your household finances.

How higher renewal rates could impact your mortgage payment in 2026

The current rate environment is markedly different from what borrowers enjoyed during the COVID era. 

In October 2021, when mortgage rates were near historic lows, a five-year fixed mortgage rate might have cost you as little as 1.79%, while five-year variable rates were as low as 0.95%. 

As of October 23, 2026, the lowest five-year fixed rate is 4.34%. The lowest variable rate is 3.43%. 

Let’s see how those rate increases might affect a mortgage payment.

A budget-stretching fixed-rate renewal

• Original mortgage amount: $650,000.
• Original amortization period: 25 years.
• Years remaining at renewal: 20 years.
• Mortgage payment at previous rate (1.79%): $2,687.
• Mortgage payment at current rate (4.34%): $3,372.
• Monthly payment increase: $685.
• Annual payment increase: $8,220.

Variable rate renewal scenarios

Variable rate scenarios are a little more nuanced because variable rates fluctuate and homeowners can choose either fixed payments or payments that adjust with each rate change.

If you took out an adjustable-payment variable-rate mortgage in October 2021 and rode it out the full five years, your mortgage rate would be about two percentage points higher today due to multiple Bank of Canada rate decisions.

The following uses the same mortgage amount and amortization periods as the fixed-rate example:

• Initial mortgage rate (2021): 0.95%.
• Mortgage payment at current rate (2.95%): $3,111.
• Mortgage payment at new rate (3.43%): $3,248.
• Monthly payment increase: $137.
• Annual payment increase: $1,644.

Your payment will experience a much steeper increase if your current mortgage is a fixed-payment variable. You’ve effectively been paying a COVID era rate and it’s time to catch up. Also, your remaining mortgage balance will be almost $60,000 larger than in the adjustable-payment example.

• Initial mortgage rate: 0.95%.
• Fixed mortgage payment since 2021: $2,435.
• Mortgage payment at new rate (3.43%): $3,610.
• Monthly payment increase: $1,175.
• Annual payment increase: $14,100.

Keep in mind that these examples are for fairly specific scenarios. Run your potential renewal through a mortgage renewal calculator to get a better sense of what your new monthly payment might be.

Homeowners are managing higher payments

The Canada Mortgage and Housing Corporation (CMHC) determined that 1.5 million households renewed their mortgage at a higher interest rate in 2025. But Canadians have largely absorbed the increased costs. As of July 2026, only 0.29% of mortgages were in arrears, or delinquent by three or more months, according to the Canadian Bankers Association.  

The “renewal wave” of 2025-2026 hasn’t swept most homeowners away. But higher mortgage costs have many of them treading water.

Watch: 3 tips for renewing your mortgage in 2026

Will mortgage renewal rates go lower in 2026?

Not likely. 

The war in Iran has driven global oil prices to multi-year highs, increasing the risk of widespread inflation and causing government bond yields to soar. These factors all work against lower mortgage rates.

Why variable renewal rates won’t decrease

Simply put, variable rates won’t drop significantly until the Bank of Canada lowers its overnight rate. Rate cuts aren’t expected in the near future. 

While inflation has remained moderate this year, crossing the 3% mark only twice, Bank of Canada governor Tiff Macklem said in Bangkok in October that the Bank was raising its inflation forecast due to persistently higher energy prices, which threaten to bleed into the wider economy. 

Expectations of higher inflation indicate that the Bank could be preparing for its first overnight rate increase in over three years. A higher overnight rate will quickly trigger higher variable renewal rates. 

Why fixed renewal rates may stay elevated

TL;DR: The war in Iran. 

Lenders use Government of Canada bond yields to price their fixed mortgage rates. As of October 2026, those yields have been driven to a range not seen in over two years. The spike has largely been due to the Iran war’s impact on oil prices, which have increased investor expectations around inflation and future Bank of Canada rate hikes.  

For context, the last time five-year bond yields were at October 2026 levels was July 2024, when the best five-year fixed mortgage rates were 4.39%. Today, the best five-year fixed rate is 4.34%. 

For fixed rates to recede to a significant degree, yields have to lead the way. For yields to fall, oil prices have to come down from their war era peaks. That scenario will likely require an end to the U.S.-Iran conflict, or at least some concrete steps toward a peaceful resolution.

How to optimize the mortgage renewal process in 2026

• Don’t feel pressured to sign your lender’s initial renewal offer. It’s the easiest option, but lenders rarely offer their clients competitive renewal rates off the bat. Only agree to your lender’s renewal terms if you’re confident that it’s the best option. 
• Shop around. You won’t know what offers are available until you do some comparison shopping. Working with a mortgage broker can get you access to a much wider range of renewal offers.
• Switch lenders. If your current lender’s renewal terms don’t align with your mortgage needs, you can renew at a different institution without fear of penalty. (Some lenders even offer cash back for switching.
• Re-evaluate your mortgage needs. Renewal is an opportunity to make strategic changes (refinancing to access equity, switching from fixed to variable, choosing a new term length) without incurring a penalty to break your mortgage mid-term.
• Extend your amortization period. A longer amortization will create smaller monthly mortgage payments. This can free up cash flow in the short-term if your new mortgage payments look unmanageable. You could pay much more in interest overall, though. 
• Lock in a rate. Getting pre-approved and securing a rate hold can save you money in 2026’s volatile rate environment. Pending full approval, you’ll be guaranteed a renewal rate, which will stay in effect for up to 120 days. If rates rise during this period, you won’t be impacted. If they fall, the lender will often provide you with a lower renewal rate when it comes time to sign.
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Assistance for renewing homeowners

According to CMHC, a million Canadian households will renew a mortgage this year. Many won’t be able to afford paying hundreds of dollars more per month. CMHC notes that people are saving less, reducing their discretionary spending, and are taking on other forms of debt to absorb higher housing costs. 

If you’re concerned that you won’t be able to manage your new mortgage payment, support is available.

The first step should always be reaching out to your lender or broker immediately to explain your situation. 

Lenders are expected to provide guidance and measures to keep borrowers afloat in the face of financial difficulty, as outlined in the Financial Consumer Agency of Canada’s Mortgage Charter. Your broker may be able to provide potential solutions or strategies for getting you through the next term of your mortgage. 

The key is early, honest communication, which will help you understand your options and create a plan. Being proactive can keep you in your home and building equity without negatively impacting your credit.

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