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

Nearly half of homeowners who face renewing their mortgage in the next year expect their monthly payments to rise. A recent survey found that 57 per cent of these homeowners believe the renewal will affect their living situation, with 73 per cent of those saying they’ll need to cut back on spending. Even though the Bank of Canada has lowered its benchmark interest rate recently, borrowing costs remain much higher than before 2022.

Nearly one quarter of the 890 homeowners surveyed are planning to change how they manage their money when their mortgage comes up for renewal. Many are making real changes: 43 per cent say they will pause any renovation plans, and 29 per cent are considering downsizing their homes. Some are even weighing living with a roommate or moving to a more affordable neighbourhood.

The survey also shows that three out of four homeowners will likely choose a fixed-rate mortgage upon renewal. TD’s vice-president for product management, Patrick Smith, says 75 per cent of those renewing tend to prefer the certainty of a fixed rate, rather than risking variable rates that may climb later. For many, locking in a fixed rate brings peace of mind, even if it costs a bit more now.

More broadly, the Bank of Canada notes that around 60 per cent of Canadian mortgage holders could face higher monthly payments when their loans come up for renewal in 2025 and 2026. That means a large portion of households across the country may have to rethink their budgets in the coming years.

These rising costs are a burden for many, especially amid still-elevated interest rates. Homeowners are reacting in different ways—some cutting discretionary spending, others delaying home improvements, or making big moves like downsizing. Choosing fixed-rate mortgages is one way they seek stability amid uncertainty.

In the months ahead, how homeowners adapt to these renewed mortgage costs will be important to watch. With many planning concrete adjustments—whether shrinking their homes, pausing renovations, or opting for fixed payments—Canadian families are bracing for a shift in their financial routines as they deal with the pressure of more expensive renewals.