Mortgage Renewal: What Your Bank Won’t Tell You

Each week, our financial columnist answers readers’ questions about personal finance, mortgages, and consumer topics.

QUESTION

“Our mortgage is up for renewal in the fall of 2026, and we’re starting to explore our options. What has changed in the mortgage market? It feels like nothing works the way it did when we bought our home five years ago.”

ANSWER

The mortgage landscape has changed dramatically over the past few years. Here are five major trends that could directly affect your finances when it’s time to renew.

1. Uninsured mortgages are now the norm

There was a time when many homeowners had insured mortgages. In Canada, mortgage insurance typically applies when the down payment is less than 20%. Today, that has changed significantly. Uninsured mortgages now account for more than $1 trillion in outstanding residential loans across the country.

What does this mean for borrowers? Since lenders assume the full risk if a homeowner defaults, they are taking a much closer look at applicants’ financial situations before approving or renewing a mortgage.

2. Variable-rate mortgages are making a comeback

Many homeowners were hesitant to choose variable-rate mortgages after the sharp interest rate increases that followed the pandemic. Watching rates climb from historically low levels to more than 5% in a short period was difficult for many borrowers.

However, variable rates are becoming popular again. As fixed mortgage rates remain above 4% while many variable rates are lower, more borrowers are willing to accept some uncertainty in exchange for lower borrowing costs.

3. Mortgage renewals are becoming more expensive

Many homeowners are facing significantly higher monthly payments when renewing mortgages that were originally signed during the era of historically low interest rates.

For some households, the increase is creating serious financial pressure. Those who no longer qualify to switch lenders may have fewer options, making it even more important to review renewal offers carefully rather than accepting the first proposal.

4. Mortgages are lasting longer into retirement

Homeowners are carrying mortgage debt much later in life than previous generations.

Rising home prices, refinancing, and larger loan balances have resulted in more Canadians approaching retirement while still making mortgage payments. As a result, many people no longer expect their home’s value alone to fully fund their retirement years.

5. Reverse mortgages continue to grow

As more homeowners look for ways to access the equity in their homes without selling, reverse mortgages have become increasingly common.

With this type of financing, homeowners can receive money based on the value of their property, while repayment is typically deferred until the home is sold or the borrower passes away. Although it can provide financial flexibility, it also reduces the value of the estate left to future heirs.

What should homeowners do?

If your mortgage renewal is approaching, don’t automatically accept the first offer from your lender.

Compare rates, negotiate your terms, and consider speaking with a mortgage professional before making a decision. Even a small difference in interest rate or mortgage conditions could save you thousands of dollars over the course of your next term.

Article translated from this Journal de Montréal article