Some 1.2 million Canadian mortgages are set to renew in 2025.
In 2021, those taken out with 3—to 5-year terms had an average interest rate of 2.05%. Today, even after 125 basis points of overnight rate cuts from the Bank of Canada, the average fixed rate on offer with a 20% downpayment is 4.39 to 6.45%, depending on whether you are buying, refinancing, or wanting a Home Equity Line of Credit (HELOC). See Is your mortgage coming due in 2025. Here’s how you can prepare for a renewal shock.
Financial Consumer Agency of Canada data found that two-thirds of Canadians with mortgages already had trouble meeting their monthly commitments in December 2022, up from 44% in August 2020. Nearly 40% of mortgage debtors said they had to borrow in 2022 to cover their daily expenses.
The average Canadian mortgage balance owed was 332K in the second quarter of 2024. The average mortgage balances owed in Ontario and BC were 456K and 427K, respectively.
The average Canadian home sale price in October 2024 was $707k (down from $817k in March 2022). With 20% down (141K), a $707k home needs a mortgage of $565K. At the 2.05% average interest rate in 2021-22, the average monthly payment on a 5-year fixed term for a $565,000 mortgage was $2,409. Today, it is $3,112 or $703 per month more.
With unemployment rising and hiring weak, it is unsurprising that insolvency filings and for-sale listings are rising in most areas.
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