Around 60% of outstanding mortgages are set to renew by the end of 2026, and about 60% of those renewals—or roughly 40% of all outstanding mortgages—are expected to face higher rates, according to research from the Bank of Canada.
“These borrowers initially took out their loans when interest rates were near their trough, and some will be facing a large payment shock,” the central bank notes.
However, it adds that many of these borrowers have ample flexibility to manage any payment shocks thanks to having paid down part of their principal over those five years, as well as potential increases in home value over that time.
“These borrowers will therefore have room to refinance their mortgage if needed,” it notes.
Meanwhile, borrowers with short-term fixed-rate mortgages—most taken out in 2023 or 2024 when rates were already higher—likely won’t see much of a payment increase.
The findings come from a Bank of Canada paper using new OSFI data, which covers about 80% of Canada’s $1.7 trillion mortgage market, including residential loans and HELOCs from federally regulated lenders.
More findings from the BoC’s mortgage research
12% of variable rate mortgages in negative amortization
New insights from OSFI’s enhanced data reveal that 12% of fixed-payment variable-rate mortgages are in negative amortization, where payments fall short of covering the interest, causing loan balances to grow.
However, data from major banks offering these mortgages show that the share of negative amortizations—and extended amortizations lengthened by rapidly rising rates—is now normalizing as rates decrease and borrowers renew, resetting to their original contracted amortization periods.
The BoC data also reveal that about 70% of outstanding mortgages were originated since 2019, with an additional 10% from 2017-2018. The Bank of Canada says this high share of recent originations may be due to faster mortgage repayments, refinancing, or home sales leading to mortgage resets.

New borrowers favouring shorter terms
The data also reveal a growing preference among borrowers for shorter-term fixed-rate mortgages.
Of mortgages originated in 2024, 71% had fixed rates with terms under five years, largely driven by low-ratio borrowers (loan-to-value ratios of 80% and less), where 74% opted for shorter terms. This contrasts with just 38% of all outstanding mortgages having terms under five years.
Variable-rate mortgages accounted for only 10% of newly originated loans in 2024, compared to 20% of all outstanding mortgages.

Younger borrowers and first-time buyers dominate high-ratio mortgages
Not all borrowers are in the same boat. High-ratio borrowers—those with loan-to-value (LTV) ratios over 80%—are typically younger, with smaller down payments and higher debt loads. They’re more exposed to rate hikes and market swings because of their smaller equity cushion.
In contrast, low-ratio borrowers, with LTV ratios of 80% or less, tend to be older, have higher incomes, and are better positioned to handle rising rates. While high-ratio mortgages account for many recent originations, low-ratio loans still make up a big part of the overall market.
Newer borrowers are taking on larger mortgages
As of September 2024, mortgages originated between January and September had a median outstanding principal balance of $344,000, compared to $245,000 for all mortgages.
The Bank of Canada says this gap highlights two trends: established borrowers have paid down their principal over time, while newer borrowers are taking on larger mortgages, driven in part by rising home prices.
This is also reflected in the median appraised value of homes at the time of mortgage origination. For all existing mortgages, the median home value was $485,000, but for mortgages originated in 2024, it jumped to $600,000.

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Last modified: January 13, 2025