Survey Shows 60% of Homeowners Cutting Back to Manage Increased Payments
As over a million Canadian mortgages come up for renewal in 2025, homeowners are preparing for substantial increases in their monthly payments. Many had locked in record-low interest rates in previous years, but those deals are now expiring, bringing financial strain to households across the country.
A recent Royal LePage survey found that 57% of renewing homeowners anticipate higher mortgage costs, with 22% expecting a significant jump. The financial impact is widespread—81% of those facing higher payments say it will put pressure on their household budgets.
Canadians Adjust Budgets to Cope with Rising Costs
To manage these rising costs, many homeowners are making lifestyle and spending adjustments:
60% are reducing discretionary spending (entertainment, dining out, etc.)
43% are cutting back on travel
36% are saving or investing less
34% are reducing essential expenses like groceries and gas
23% are exploring additional income sources, such as a second job
Despite these challenges, homeownership remains a priority for Canadians.
"Even in difficult financial times, Canadians are committed to keeping their homes and paying down their mortgages, even if it means cutting other expenses," said Phil Soper, CEO of Royal LePage.
More Homeowners Considering Variable-Rate Mortgages
As mortgage rates trend downward, some homeowners are reconsidering their financing strategies. While 66% still prefer fixed-rate mortgages, the share of those opting for variable-rate loans has grown to 29%, up from 24%.
"With the Bank of Canada implementing multiple rate cuts, variable mortgage rates have become more appealing for homeowners looking to lower monthly payments or pay off their principal faster," Soper explained.
Economic Uncertainty and Potential Rate Cuts
Ongoing trade tensions between Canada and the U.S. could add another layer of uncertainty. According to the survey, if trade conflicts escalate, the Bank of Canada may be forced to introduce more aggressive rate cuts to counter inflationary pressures.
"While economic instability isn't ideal, it could lead to lower borrowing costs for new homebuyers and those renewing their mortgages," Soper added.
Regional Differences in Mortgage Renewal Impact
The financial strain isn’t felt equally across the country:
Saskatchewan and Manitoba have the highest levels of concern, with 89% of homeowners anticipating financial difficulty.
Atlantic Canada follows closely, with 64% expecting higher costs.
Quebec homeowners are the least worried, with 73% saying they don’t foresee major financial hardship.
In response to affordability concerns, 11% of homeowners are considering relocating to a more budget-friendly region, while 10% are thinking about downsizing or renting out part of their home to offset mortgage expenses.
Despite these challenges, Canada’s mortgage delinquency rate remains low at 0.20% as of Q3 2024, according to Canada Mortgage and Housing Corporation (CMHC).
While higher renewal rates pose financial hurdles, Canadians continue to prioritize homeownership, adjusting their budgets and considering new mortgage strategies to navigate the changing landscape.
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