More than a million mortgages renew this year and Canada’s lenders are preparing for a fight. Why you could end up the winner

This year, over a million Canadian homeowners are set to renew their mortgages, a process that could lead to higher monthly payments due to increased interest rates. However, this situation is also sparking intense competition among lenders, which might benefit borrowers.

The Canada Mortgage and Housing Corporation (CMHC) reports that approximately 1.2 million mortgages will come up for renewal in 2025. Notably, 85% of these were initially signed when the Bank of Canada's interest rate was at or below 1%. As these mortgages renew at current higher rates, many homeowners will face increased payments.

In response, lenders are gearing up to attract these renewing borrowers. Analysts predict a "mortgage rate war" as banks and other financial institutions compete to offer the most appealing terms. This competition could lead to better deals for homeowners looking to renew their mortgages.

To further assist borrowers, Canada's banking regulator has made it easier to switch lenders upon mortgage renewal. Starting November 21, borrowers seeking a 'straight switch'—changing only the lender without altering the mortgage amount or repayment schedule—no longer need to prove their income meets the Minimum Qualifying Rate. This change aims to provide more options for homeowners at renewal time.

Despite these developments, homeowners should prepare for potential increases in their monthly payments. Bank executives estimate that customers might pay an additional C$400 to C$500 per month upon renewal. However, with careful planning and by exploring competitive offers, borrowers can find favorable terms that suit their financial situations.

In summary, while the upcoming wave of mortgage renewals presents challenges due to higher interest rates, the heightened competition among lenders and recent regulatory changes offer opportunities for homeowners to secure advantageous terms. By staying informed and considering various options, borrowers can navigate this period effectively.