Warning! Mortgage Renewals Are a Huge Potential Issue This Year

The 2025 Mortgage Renewal Crunch: Will Homeowners Sink or Swim?

2025 is shaping up to be a make-or-break year for hundreds of thousands of Canadian homeowners. Why? Because the historically low interest rates that were locked in during the pandemic era are now expiring. And the renewal shock that’s coming? It’s not a maybe—it’s a math problem. This is the biggest wave of mortgage renewals in Canadian history, and it’s going to reshape budgets, investment strategies, and yes, even the real estate market itself.In this post, we’re diving deep into the data, the impact, the options, and what you need to do right now if your mortgage is coming up for renewal. Whether you’re a homeowner, an investor, or just trying to time the market, this guide is your survival plan.Why 2025 Is the Perfect StormDuring 2020–2021, millions of Canadians jumped into 1- to 5-year fixed-rate mortgages at record-low interest rates—many as low as 1.5%–2.2%. These terms are now expiring.The problem? Renewal rates today are sitting between 5.25% and 6.25%. That means a homeowner with a $600,000 mortgage will see their payments jump from around $2,400/month to more than $3,687/month—a staggering 53% increase.According to BCREA and CMHC forecasts:

• Over 40% of Canadian mortgage holders will renew between 2025–2026.
• Mortgage delinquencies are projected to rise 2x–3x over the next 18 months.
• First-time buyers and variable-rate holders are most exposed.

Case Study – Vancouver Couple

• 2020: Bought townhouse in East Vancouver for $890,000 with 5% down
• 5-year fixed rate @ 1.79% = $3.037/month
• 2025: Renewal offer at 5.79% = $5,340/month

That’s a $2,303/month difference—or $27,636/year. With grocery and gas prices also rising, it’s a budget killer.Who’s Most at Risk?Let’s break down the 3 groups facing the biggest pressure:

1. First-Time Buyers (2020–2022)
   Many bought with low down payments and haven’t built enough equity to refinance easily.
2. Investors with Multiple Properties
   Cash flow gets crushed when rental income no longer covers rising mortgage payments.
3. Variable Rate Borrowers
   While some already absorbed payment shocks in 2022–2024, others deferred and are now facing the wall.

In BC, where home values are higher, the squeeze is tighter. Particularly in:

• North Vancouver
• Burnaby
• Tri-Cities

What Are Your Options?Here’s a playbook based on real financial strategies:

🔁 1. Early Renewal

• You can lock in a rate 120–180 days before renewal.
• Many lenders allow this without penalty.

🏦 2. Switch Lenders

• Could save up to 0.25–0.5% on your new rate
• Be aware: you may have to re-qualify under stress test rules (contract rate +2%).

💳 3. Re-Amortize Your Mortgage

• Reset your amortization from 20 years back to 25 or 30
• This lowers monthly payments, but increases total interest paid over the term

💰 4. HELOC Refinance or Blend & Extend

• If you have equity, consider a refinance with blended rate
• HELOC option gives flexibility but comes with variable interest

🏠 5. Sell or Downsize

• If payments become unmanageable, sell before the pressure mounts
• You may still walk away with equity and preserve credit score

Market Impact — Will Prices Drop?Here’s the big debate: Will all this pressure lead to a price correction?📉 In suburban and investor-heavy markets (e.g., Langley, Maple Ridge, Surrey), we’re already seeing:

• More listings
• Longer DOM (days on market)
• Slight downward pricing pressure on detached homes

📊 According to REBGV’s early September Annual Trend update:

• New listings up 12% 
• Active inventory up 18%
• Average DOM for detached = 26 days (up from 17 in July)

Expect a 5–8% price softening in areas with more leveraged owners. However, strong demand and immigration keep central areas like Vancouver, North Van, and Burnaby relatively stable.What Buyers Need to KnowIf you’re entering the market during this turbulence, you’re in a unique position to:

• Negotiate better with renewal-pressured sellers
• Build equity smarter by avoiding peak pricing

👀 Look for stale listings, price reductions, and vacant homes with motivated sellers.Final Thoughts — Sink or Swim?This mortgage renewal wave doesn’t have to be a disaster. But for those who ignore it, it could lead to forced sales, damaged credit, and missed opportunities.Here’s the key:

• Get ahead of your renewal.
• Know your numbers.
• Talk to a pro.

CTA: Ready for Your Renewal?
Let’s walk through your options before the pressure hits.
Kevin LynchRemax Crest Realty604-307-9448