Approximately 60% of all outstanding mortgages in Canada are expected to renew in 2025 and 2026. While purchase pipelines may be slow, brokers can adapt with communications that serve the influx of renewal clients navigating new market realities.
A recent Bank of Canada rate cut to 2.50% is expected to put downward pressure on short-term and variable mortgage rates, opening windows for better renewal terms. 70% of Canadians are nervous about their family’s financial situation in the coming months, and lower mortgage rates could ease pressures caused by the so-called “mortgage renewal cliff” many homeowners are facing after securing historically low rates during the pandemic.
The Canadian housing market forecast looks more uncertain. Recent data from the Canadian Real Estate Association (CREA) shows the national average home price up 0.7% year-over-year in September, while CMHC expects prices to edge lower overall, projecting a modest 2% national decline of about 2% for 2025. As more Canadians tighten budgets and remain uncertain about their financial futures, many will be inclined to take a “wait and see” approach to buying, selling or financing a home.
In a cooling market, brokers who help clients navigate renewals strategically will build trust and position themselves well for the anticipated housing market recovery in 2026. With clients feeling heightened anxiety around renewals, proactive, informed conversations can make all the difference—helping them understand their options and select a mortgage that aligns with their financial reality.
Navigating payment shock during the mortgage renewal wave
As more mortgages come up for renewal, many borrowers will see their payments change—though the impact varies based on borrower and product types. About 60% of those renewing in 2025 and 2026 are expected to face higher payments, most holding five-year fixed-rate mortgages. On average, payments could be roughly 10% higher in 2025 and 6% higher in 2026 compared with December 2024. For borrowers with five-year fixed rates, increases could range from 15%–20%, while those with variable-rate mortgages may see a modest decline of 5%–7%.
Brokers can play a significant role in helping clients secure the right renewal or refinancing deal that meets their needs while minimizing costs – and potential payment shock. With new market developments creating more options, thoughtful guidance can positively impact clients’ financial picture and help them avoid unnecessary extensions to their amortization simply to make payments more manageable.
OSFI’s new straight-switch exemption gives clients more options
New OSFI legislation will give brokers more leverage to help clients shop for the best mortgage. OSFI’s straight-switch exemption allows uninsured borrowers to switch lenders without needing to re-qualify under the Minimum Qualifying Rate, provided they don’t want to change the type or terms of the mortgage.
This makes the lending environment more competitive and opens up options for borrowers looking for more favorable terms. 28% of mortgage owners switched lenders in Q1 2025, and it’s likely that many more will do so to secure better deals as mortgages come up for renewal. Brokers who research the lending market and build strong lender partnerships can help ensure borrowers have access to wider spectrum of options – and help them choose the one that best suits their needs.
Making the legislation clear is the first step to helping borrowers understand they have new options available. For example:
“I know switching lenders can feel like a hassle, but the process has gotten much simpler. As long as we’re keeping your loan amount and amortization the same, you won’t need to re-qualify under the stress test. The lender will still review your financials, but it removes a major barrier. It’s worth exploring whether we can get you a better rate.”
As they evaluate their options, many borrowers will also want to understand how Bank of Canada rate cuts will impact their options in the near and long term.
How will rate cuts impact the mortgage market?
In spite of the new OFSI exemption, some clients may prefer to switch to a new mortgage type to take advantage of anticipated future rate cuts – even if it means they need to re-qualify under the minimum qualifying rate (MQR). While this requires going through the stress test again, clients with strong financials may find the potential savings worth the extra qualification step.
Bank of Canada rates have been falling steadily over the past year, with the most recent 0.25% cut coming in September. CTV News reports that if lenders pass on the full reduction, the lowest variable rates could fall to 3.70% (compared with 3.94% for the lowest fixed rate). As mortgage expert Penelope Graham notes, “For somebody who is attracted by variable rates, there’s also the growing narrative that we might see more rate cuts to come this fall.”
Following a strong September jobs report, however, the Bank may hold rates at the October 29 decision, with further cuts still likely before year-end.
Many clients will likely wonder whether their finances are best served with a variable rate or a fixed rate. Conversations should help clients understand how their risk tolerance affects their decision:
“Variable rates respond quickly to Bank of Canada cuts, so if rates continue to drop as some economists expect, you’ll see immediate savings. Right now, competitive variable rates are around 3.70%. Fixed rates give you payment certainty but they’re not directly impacted by Bank of Canada interest rate decisions. Right now, the lowest five-year fixed rate is around 3.94%. If you need to know exactly what your payment will be for the next five years, fixed might be the better choice. If you’re comfortable with some movement and think rates will keep falling, variable could save you money.”
Rate cuts also influence purchase decisions. Falling rates improve affordability and qualification room, but in a market where prices are also expected to decline, many potential buyers are weighing whether to act now or wait. This creates a unique challenge for brokers: keeping purchase clients engaged when the instinct is to sit on the sidelines.
Keeping purchase clients engaged in a cooling market
After Canadian real estate spring trends pointed towards an uncertain fall, CMHC’s new baseline scenario predicts weaker growth until conditions stabilize in mid-2026. Many homebuyers will remain priced out of the market in the near term; however, CREA reports that home sales are slowly recovering, up 1.1% month-over-month in September.
CREA’s Senior Economist Shaun Cathcart notes that rate cuts could spur more homebuying activity in the year ahead: “With three years of pent-up demand still out there and more normal interest rates finally here, the forecast continues to be for further upward momentum in home sales over the final quarter of the year and into 2026.”
Tools like rate holds, pre-approvals, and down payment planning will give clients options to think about if they’re delaying a purchase:
“I completely understand wanting to see how the market develops. Here’s what I’d suggest: let’s get you a rate hold and a pre-approval now. A rate hold locks in today’s rate for 90-120 days at no cost – if rates drop, you get the lower rate; if they rise, you’re protected. The pre-approval tells us what size mortgage you qualify for and keeps you ready to move quickly when you find the right property. Even if you’re not buying today, this keeps your options open without any commitment.”
Prospective buyers weighing their options will be questioning whether to buy now and take advantage of current rates, or to wait and hope for home prices to drop further – rate holds can help them get the best of both worlds.
Finding the right renewal options for anxious clients
With rates shifting, regulations changing, and financial anxiety running high, clients need a trusted advisor to help them achieve peace of mind. The coming wave of renewals is a prime opportunity to strengthen relationships and demonstrate your value by helping clients understand what option will serve them best in the years ahead.
Brokers who communicate clearly, offer strategic advice, and build strong lender partnerships will earn long-term trust with renewal clients and position themselves well for the housing market recovery expected in 2026.
At CMI, we’re committed to supporting our broker partners with customized private mortgage solutions. Whether you’re exploring unique deal structures, assessing complex borrower scenarios, or looking for guidance on flexible financing options, our team is here to provide the expertise and support you need. Reach out today to see how we can help.
