You locked in a mortgage during the pandemic at 2%. Your five-year term is up this year. Your broker just sent your renewal quote, and it’s 5.5%. That’s real for thousands of Canadians right now. But here’s the twist: not everyone renewing in 2026 is getting squeezed. Some households are about to catch a break.
What Are the Predicted Mortgage Renewal Rates for 2026?
Mortgage renewal rates in 2026 depend on when you took out your original mortgage. If you locked in during the pandemic (2020-2021), you’re facing a steep jump. According to Desjardins economists, borrowers with five-year fixed-rate mortgages could see payments rise by roughly 20%. Variable-rate borrowers with fixed payments? That’s closer to a 40% increase.
That’s a big deal. A $400,000 mortgage that cost you $1,800 a month might now hit $2,160 or more. Real talk: that’s an extra $360 every month.
But if you bought or refinanced during the rate-hiking cycle (2022-2023), you likely chose a shorter term — one or two years — to avoid locking in at peak rates. Those borrowers are now renewing into lower rates. Payments for this group could drop by as much as 20%, according to the same Desjardins analysis.
How Does the Bank of Canada’s Policy Rate Affect Your Renewal?
The Bank of Canada sets the policy rate, which influences what lenders charge on mortgages. It peaked at 5% in mid-2023. Since then, it’s dropped to 2.25% as of early 2025. That’s why recent fixed and variable rates are lower than they were two years ago.
When you renew, your lender offers a rate based on current conditions — not the rate you had before. If the policy rate is down, renewal rates tend to follow. If it’s up, you pay more. Simple as that.
Here’s the thing: the timing of your original mortgage matters more than you’d think. A five-year term from 2021 means you’re renewing now, into a market that’s cooling but still well above pandemic lows. A two-year term from 2022 means you’re renewing into rates that have actually dropped.
Why Are Some Homeowners Seeing Lower Payments in 2026?
Shorter-term borrowers are the ones benefiting right now. They took out mortgages when rates were high — often 5% or more — and chose one- or two-year terms to keep their options open. Now they’re renewing into a market where five-year fixed rates are closer to 4.5%.
That’s a meaningful drop. On a $500,000 mortgage, shaving off even 50 basis points can save you $150 a month. Over a year, that’s $1,800 back in your pocket.
Another factor: many homeowners have been making extra payments. Non-scheduled mortgage payments increased between 2023 and 2025 compared to pre-pandemic years, according to the Desjardins report. Paying down principal early reduces your balance, which means lower payments at renewal — even if rates stay the same.
What Should You Do If Your Renewal Payment Is Going Up?
First, don’t wait until the last minute. Lenders send renewal offers 30 to 120 days before your term ends. That’s your window to shop around. Your current lender’s renewal rate isn’t your only option — and it’s often not the best one.
Second, consider working with a mortgage broker. Brokers can access multiple lenders and compare rates you won’t see advertised. If your payment is about to jump 20%, even a 0.25% rate improvement can save you thousands over the term.
Third, extend your amortization if you need breathing room. You can’t extend beyond your original amortization at renewal, but if you’ve been paying down your mortgage, you might have room to stretch the term back out. This lowers your monthly payment but increases total interest paid. It’s a trade-off.
Finally, lock in a rate hold if you’re not renewing for another 60-90 days. A rate hold protects you if rates climb before your renewal date. Most lenders offer this at no cost.
Is There Financial Relief Coming for Homeowners After 2026?
Yes, but it depends on your situation. By 2027, most renewing mortgages should see lower monthly payments, according to Desjardins. The wave of pandemic-era mortgages will have cycled through by then, and the majority of renewals will be from higher-rate terms taken out in 2022-2023.
That means if you’re renewing in 2027 or later, odds are good you’ll pay less than you do now. Population growth is expected to resume, and fiscal policy should provide stronger economic support, which tends to stabilize housing demand and lending conditions.
Bottom line: 2026 is the squeeze year. After that, the math gets friendlier for most homeowners.
Frequently Asked Questions
What are typical mortgage renewal rates in Canada right now?
As of early 2025, five-year fixed mortgage renewal rates range from 4.5% to 5.5% depending on the lender and your credit profile. Variable rates hover around 5% to 5.5%. These are higher than pandemic lows but lower than rates in 2022-2023 when the Bank of Canada policy rate peaked at 5%.
Can I negotiate my mortgage renewal rate?
Yes. Your lender’s renewal offer is a starting point, not a final number. Shopping around — either on your own or through a mortgage broker — often results in a better rate. Lenders want to keep your business, so they may match or beat competing offers if you ask.
What happens if I can’t afford my mortgage renewal payment?
Contact your lender immediately. Options include extending your amortization (if eligible), switching to a longer-term fixed rate to stabilize payments, or refinancing to consolidate higher-interest debt. In severe cases, selling the home may be necessary. Ignoring the issue leads to arrears, which damages your credit and can result in foreclosure.
How much can mortgage payments increase at renewal?
It depends on your original rate and term. Borrowers who locked in at 2% during the pandemic and are renewing at 5% could see payments rise 20% or more. Variable-rate borrowers with fixed payments face even steeper increases — up to 40% in some cases, according to Desjardins analysis.
Should I renew early to lock in a lower rate?
Only if you’re confident rates are rising. Breaking your current mortgage early usually involves a penalty — either three months’ interest or the interest rate differential, whichever is higher. Compare that cost against the savings from a lower rate. A mortgage broker can run the numbers for you to see if it makes sense.
Facing a mortgage renewal in 2026 and not sure where to start? Arch Canada can match you with a mortgage broker who’ll compare rates across lenders and help you find the best option for your situation. No upfront cost. Just better rates and clear answers.
