Many homeowners plan to rein in spending as mortgage payments rise upon renewal

Many homeowners in Canada are bracing for a rise in mortgage payments when their current terms come up for renewal, and many plan to tighten their spending to cope. A recent survey found that 45 per cent of homeowners expecting a renewal in the coming year anticipate their payments will increase, with nearly three-quarters of them saying they will need to cut back on expenses to manage the higher cost.

The survey also showed that over half of homeowners believe their upcoming mortgage renewal will affect their living situation. This reflects growing pressure on household budgets, even though interest rates have started to come down slightly. While borrowing costs have dipped compared to last year, they still remain much higher than what most borrowers were used to just a few years ago.

To adjust, almost one in four homeowners said they plan to change their financial strategy when renewing their mortgage. Many are cancelling or delaying renovations—about 43 per cent said home upgrades would have to wait. Others are looking at downsizing or moving to more affordable homes, while some are considering shared living arrangements to cut costs.

When it comes to choosing their new mortgage, 75 per cent of homeowners leaning toward renewal say they plan to pick a fixed-rate mortgage over a variable one. For many, the idea of predictable payments provides a sense of security amid an uncertain economic climate. This shift follows a period where people locked into low fixed rates that are now expiring, leading to significant jumps in monthly payments.

Roughly 1.2 million mortgages are expected to renew this year, which could add more financial pressure across the country. Even small increases in rates can translate into hundreds of extra dollars each month, especially for those who bought homes when interest rates were at historic lows. This has created what some experts are calling a “renewal cliff,” with payments jumping just as household budgets are already stretched.

To manage the squeeze, many homeowners are cutting non-essential spending, putting off major purchases, and looking more carefully at their renewal options. However, some people may not realize they can shop around or switch lenders when their term ends, missing a chance to find better rates. As renewals ramp up through 2025, many Canadians will be forced to rethink how they spend, save, and live under the weight of higher mortgage costs.