Here's how homeowners are coping with mortgage renewals in a choppy economy

Toronto’s sharp rise in mortgage delinquencies turned renewal time into a stress test for many homeowners – especially those who bought at peak prices during the pandemic, according to mortgage broker Victor Tran of Rates.ca.

The number of borrowers in arrears in the Greater Toronto Area more than quadrupled from 2022 to late 2025, Canada Mortgage and Housing Corporation (CMHC) data showed, even as the overall delinquency rate remained low by historical standards.

Nationally, arrears also edged up but still sat around a quarter of one percent of mortgages.

Arrears rose – but most borrowers still paid

“At first glance, the increase sounds alarming, but the overall delinquency rate remains low,” Tran said.

“It reflects the strain higher rates are putting on monthly payments at renewal, especially for homeowners who bought during the pandemic, rather than widespread foreclosure risk.”

CMHC modelling suggests arrears would continue rising moderately through late 2026, with Toronto leading delinquency growth as high household debt, softer prices and a weaker labour market squeeze borrowers.

Federal watchdog Office of the Superintendent of Financial Institutions (OSFI) likewise warned of “mortgage payment shocks” as more than one‑third of Canadian mortgages come up for renewal by the end of 2026, even after rate cuts.

Tran stressed that lenders generally prefer to avoid taking properties back. “Lenders typically want to avoid foreclosure,” he said. “It’s costly and time‑consuming, which means lenders are often motivated to work with homeowners to find solutions that keep them in their homes.”

He pointed to extending amortizations, refinancing to roll in higher‑interest debt, or restructuring terms to improve monthly cash flow as options borrowers explore when payments become tight.

Options narrowed for borrowers who waited

Still, renewal has not guaranteed flexibility. Homeowners who no longer meet qualification rules often have to stay with their existing lender, Tran noted, limiting their ability to shop the market or access equity even with a perfect payment history – a constraint regulators and consumer‑credit agencies also highlighted as renewals reset at higher rates.

“Missed payments usually don’t happen all at once,” Tran said. “As renewals roll through at higher rates, pressure builds month by month, especially for homeowners with tighter budgets, and many don’t realize how quickly options can narrow if they wait until close to renewal to revisit how their mortgage is structured.”

For Toronto borrowers heading into renewal, Tran’s message is that early engagement matters: understand how arrears are treated, assess income and debt before signing a new term, and approach the lender – or a broker – while there is still time to adjust the mortgage rather than after a missed payment forces the issue.

CMP

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