No mortgage crisis ahead despite looming renewal wave

Canadian homeowners facing higher monthly payments when they renew their mortgage are handling that trend well – but there could still be speedbumps ahead with a slew of renewals coming in 2026.

That’s according to Canada Mortgage and Housing Corporation (CMHC), which painted a measured picture of that coming renewal wave in its latest residential mortgage industry report, released this week.

The national housing agency highlighted that while there’s been no mortgage crisis yet from renewals, there were still more than 750,000 mortgages scheduled to renew in the second half of 2025, followed by upwards of a million more next year and 940,000 in 2027.

Interest rates may have fallen recently, but the average five-year fixed uninsured mortgage rate was still 67% higher in July 2025 than the same time five years previously, when rates plunged amid the COVID-19 pandemic.

For now, borrowers are managing any higher-payment pain that’s arising. For the first time since 2022, the national mortgage delinquency rate fell in the second quarter although Ontario and British Columbia, the two priciest provinces for real estate, saw arrears climb.

Questions around a potential mortgage renewal “cliff” arose in 2023 and 2024, when a series of rapid interest rate hikes by the Bank of Canada first sparked concerns that many borrowers would prove unable to handle the jump in payments.

However, the central bank has since cut rates nine times, improving the outlook somewhat even though borrowing costs remain much higher than they were five years before.

Brokers urge proactive approach to manage renewals

Mortgage brokers are also taking a calm view of the market as 2026 looms into view. Victor Tran (pictured top), a mortgage agent with Tango Financial and RATESDOTCA housing and mortgage expert, told Canadian Mortgage Professional it’s essential for borrowers to shop around as early as possible when their mortgage is coming up for renewal.

For some lenders, turnaround times can be slow because refinance transactions and mortgage transfers from one lender to another simply aren’t a priority compared with the purchase side.

“So it’s important for Canadians to shop as early as possible so they have enough time to complete a mortgage transfer should they find a lower rate elsewhere,” Tran said. “Most people, unfortunately, still wait until the last minute.

“We’re talking about a couple of weeks or even a month before the renewal day. Start shopping around and by then it might be a little too late – but not impossible. You can still transfer to a different lender for a lower rate.”

But borrowers who don’t give themselves enough time to begin that process can complicate things: firstly, they would likely have to renew with their current lender into an open term to buy themselves some more time to complete the mortgage transfer.

“It’s just a little messier, a little bit more interest that they have to pay going into an open mortgage because open mortgages have full flexibility to pay out at any time with no penalty,” Tran said. “But the rate’s a lot higher so it’s always best to avoid that by just starting early.”

Delinquency trends suggest strain will remain contained

For now, there doesn’t appear to be any sign that a mortgage renewal meltdown is ahead. Mortgage delinquency rates are still lower than those in other credit products – unsurprisingly, as mortgage payments are normally a top priority for borrowers.

That said, delinquency rates for Canadians who hold mortgages are increasing at a faster clip than for those who don’t, including credit card, auto loan, and line of credit arrears.

Another delinquency trend of interest to the mortgage space: in the mortgage investment entity (MIE) sector, delinquency rates of 90 days or more fell in 2025’s first quarter compared with Q4 of last year, although they were still higher on a year-over-year basis.

The same couldn’t be said for chartered banks and credit unions, where delinquency rates increased but were still lower than pre-pandemic levels.

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Home sales edge higher across Canada in October

Canadian home sales saw a modest uptick in October, with activity edging up 0.9% month-over-month according to the Canadian Real Estate Association (CREA).

The increase marked the sixth monthly gain in the past seven months, signaling renewed momentum after a brief pause in September.

However, the market remained softer than a year ago, with actual sales down 4.3% from October 2024 and the national average sale price slipping 1.1% to $690,195.

CREA’s senior economist Shaun Cathcart said the latest figures suggest a market gradually regaining its footing.

“After a brief pause in September, home sales across Canada picked back up again in October, rejoining the trend in place since April,” Cathcart said.

“With interest rates now almost in stimulative territory, housing markets are expected to continue to become more active heading into 2026, although this is likely to be tempered by ongoing economic uncertainty.”

Supply remained tight, with new listings down 1.4% month-over-month. The sales-to-new listings ratio tightened to 52.2%, inching closer to the long-term average of 54.9%.

Inventory levels held steady at 4.4 months, the lowest since January, and below the long-term average of five months. At the end of October, 189,000 properties were listed for sale, up 7.2% from a year earlier but still in line with historical norms.

CREA chair Valérie Paquin pointed to signs of pent-up demand building ahead of the traditionally quieter winter season.

“As we head into the quiet winter season, we continue to see clues that underlying demand for housing is picking up steam,” Paquin said.

“All eyes will be on next year’s spring market to see if all that pent-up demand will finally come off the sidelines in a big way.”

Market watchers noted that the National Composite MLS Home Price Index edged up 0.2% month-over-month, though it remained down 3% year-over-year. That's the smallest annual decline since March.

The sales-to-new listings ratio and months of inventory both indicated a market hovering in balanced territory, with neither buyers nor sellers holding a decisive advantage.

While Canadian home sales in October remained below last year’s levels, steady monthly gains and tightening supply suggest a market poised for increased activity in 2026, provided economic uncertainty don’t derail the recovery.

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Toronto council votes to oppose Bill 60 over easier evictions

Toronto City Council has sent a clear message to Queen’s Park, voting overwhelmingly to oppose the Ford government’s proposed Bill 60, the Fighting Delays, Building Faster Act.

The council’s stance reflects deep concerns that the legislation could erode tenant protections and drive up evictions at a time when half of Toronto’s residents rent their homes.

Mayor Olivia Chow, who brought the motion forward, said the bill would “lessen the impact this bill would have to Toronto’s renters, because they deserve fairness. They deserve civility and security, just like everybody else does.”

Chow added, “About half of Toronto’s residents rent their homes. They deserve stability, fairness and peace of mind that comes from knowing they will not face unfair evictions or sky-high rent increases.”

The bill, introduced late last month, is part of the province’s broader effort to address Ontario’s housing crisis and reduce the backlog at the Landlord and Tenant Board (LTB).

Ontario Real Estate Association’s (OREA) has welcomed the new housing bill, describing it as a “big step in the right direction.” 

Dave Wilkes, president and CEO of the Building Industry and Land Development Association, stated, “This bill acknowledges and addresses the importance of producing housing supply faster, at a scale and cost to meet the needs of Ontario families.”

However, critics argue that the changes, such as cutting the appeal period from 30 to 15 days and eliminating compensation for tenants evicted for personal use, would make it harder for renters to defend their tenancies.

“If the people of Toronto don’t want to see more people on the street they need to stand with council on this,” said coun. Alejandra Bravo.

Coun. Josh Matlow argued the government was prioritizing developers over renters, stating, “By removing those protections, it would leave tenants across Ontario in a situation where they would be even more vulnerable.”

The Ford government, for its part, has maintained that Bill 60 is designed to “restore balance and rebuild confidence” in the rental market, with attorney general Doug Downey stating the changes are needed to attract more landlords.

But Chow countered, “This is not how we build housing, and it is not how we build a caring city.” She pointed to Toronto’s Rental Housing Supply Program, which waives development charges for new rental projects with affordable units, as a more effective solution.

Council’s motion also called on the province to extend rent control to units built after 2018 and directed the city solicitor to explore legal avenues to challenge Bill 60. The Association of Municipalities of Ontario was urged to study the bill’s potential impact on housing stability and municipal services.

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Canada’s stalled homebuilding casts long shadow over economic recovery: Fraser Institute

Canada’s homebuilding sector has continued to underperform, with sluggish housing starts and delayed projects threatening to drag down the broader economy.

Despite political promises to ramp up construction, the pace of new builds in key markets like Greater Toronto and Metro Vancouver has failed to keep up with demand, raising concerns among industry experts and economists.

“Homebuilding continues to come up short in some parts of the country, including several metro regions where most newcomers to Canada settle,” Jock Finlayson, senior fellow at the Fraser Institute, said.

“The last 12-18 months have seen many planned development projects in Ontario and British Columbia delayed or cancelled outright amid a glut of new unsold condominium units and a sharp drop in population growth stemming from shifts in federal immigration policy.”

The Canada Mortgage and Housing Corporation (CMHC) revised down its national forecast for housing starts over 2025 and 2026, despite the federal government’s pledge to double the pace of homebuilding. 

Ontario’s housing starts in 2024 fell short of what’s needed to reach the 1.5 million homes goal, with first-quarter 2025 starts at their lowest since 2009, according to the province’s financial accountability officer. 

“The on-the-ground reality points to stagnant or dwindling housing starts in many communities, particularly in Ontario and B.C.,” Finlayson said.

Residential real estate sales have also slowed in several regions, compounding the problem. “A fall-off in real estate transactions tends to have a lagged negative effect on construction investment—declining home sales today translate into fewer housing starts in the future,” Finlayson said.

The slowdown in homebuilding is not just a sectoral issue. Construction accounts for nearly 8% of Canada’s economy, and if government-driven industries are excluded, it employs more than one in ten private-sector workers.

“Most of these jobs involve homebuilding, home renovation, and real estate sales and development,” Finlayson said.

According to Statistics Canada, the value of GDP directly attributable to housing reached $238 billion in 2024, up slightly from 2023 but still below 2021 and 2022 levels.

Ontario and B.C. have seen notable declines in residential construction GDP since 2022—a trend expected to persist into 2026. Housing-related activity supported some 1.2 million jobs in 2024, with about three-fifths of those being direct construction roles.

A sustained downturn in homebuilding could ripple through the economy, affecting suppliers, reducing tax revenues, and slowing overall growth.

Canada’s economy took a step back in August, with GDP contracting by 0.3%. That's a sharper decline than economists had anticipated.

The pullback, driven by broad-based weakness across both goods and services sectors, has reinforced expectations among leading economists that growth will remain subdued into next year.

“Canada’s economy will struggle to rebound from the doldrums of 2025 without a meaningful turnaround in homebuilding,” Finlayson said.

Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee previously warned that Canada’s homebuilding crisis may already be even worse than it seems with housing starts essentially skewed by construction of purpose-built rental accommodation.

The government, according to Toronto mortgage agent Kalson Jang, “needs to make it easier and less costly for developers to build homes.

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Balance could be returning to Canada's housing and construction sectors despite recent headwinds

Canada’s housing and construction sectors are entering a period of recalibration as inflation cools, interest rates stabilize, and renovation activity strengthens, according to Altus Group’s latest analysis.

The report projects GDP growth of about 1.4% in 2026, signalling steady, moderate expansion. Inflation has returned to the Bank of Canada’s 1–3% target range, with food and shelter costs easing. This stability has allowed rate cuts to unwind much of the earlier tightening, positioning borrowing costs near levels supportive of investment and consumption.

Altus Group data shows that consumer spending has held up despite earlier uncertainty. Inflation-adjusted retail sales turned positive in mid-2025, reflecting steady employment and household resilience. GDP figures also show a temporary contraction in the second quarter of 2025, followed by modest recovery led by resource-producing provinces such as Alberta and Saskatchewan, while central Canada continues to slow.

Labor market conditions are cooling, with unemployment edging above 7%. Roughly 200,000 new jobs were created in the past year, suggesting that a slower population increase may help moderate wage growth pressures.

Population growth, once exceeding 750,000 annually, is now expected to flatten or decline due to immigration policy adjustments. This demographic transition may shift long-term housing demand, with growth concentrated in the 35–50 age group, while the 20–35 cohort — key to rental and entry-level condo markets — slows.

Housing activity mirrors these demographic and financial trends. Around 500,000 resale transactions are projected nationwide in 2025, close to pre-pandemic norms. New-home sales, however, have dropped more than 60% from 2022 levels in Toronto and Vancouver, even as housing starts remain elevated at more than 250,000 units, driven by projects already underway.

Construction costs have eased from pandemic peaks. Western Canada still sees 5–8% annual increases, while Toronto markets have seen costs drop by about 20%. These adjustments have helped restore margins and stabilize supply chains.

Renovation has become the dominant driver of housing investment, accounting for 56% or $103 billion of total residential spending in 2024. With affordability gradually improving and rates falling, renovation activity is expected to sustain demand for materials and labour through 2026.

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We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

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