Canada’s banking sector is entering what may be the most significant mortgage renewal cycle in decades.
By the end of 2026, nearly half of Canadian homeowners will renew their mortgages, trading the rock-bottom rates of the pandemic years for noticeably higher payments.
The concern isn’t limited to homeowners. Investors, policy-makers and lenders are closely monitoring how borrowers will handle the transition. So far, the tone from Canada’s major banks is measured.
That topic was front and centre at the Barclays Global Financial Services Conference in New York last month, where senior bank leaders acknowledged the scale of the upcoming renewals but expressed optimism that most households, as well as the financial system overall, are equipped to manage the adjustment.
A tidal wave of renewals, but no panic
According to the Bank of Canada, average monthly mortgage payments could rise by about $400 at the height of the renewal cycle. For many households, that’s a significant jump in living costs, especially in regions already feeling economic pressure.
Banks are forecasting similar increases, with TD expecting the average payment rise for renewing customers in 2026 to equal just over 3% of household income.
While early signs indicate that households are coping, with the initial wave of 2025 renewals unfolding smoothly, there are emerging signs of financial strain.
CIBC reported a rise in its mortgage delinquency rate to 36 basis points in the third quarter, while BMO said its impaired loan provisions remain elevated at 45 basis points.
RBC pointed to rising pressure in Windsor, where a slowdown in the auto sector is straining household budgets. Meanwhile, Scotiabank noted that variable-rate mortgage delinquencies appear to be levelling off, but fixed-rate arrears are now trending higher.
Resilient borrowers and lower rates ease lender concerns
At the Barclays conference, executives emphasized that while some borrowers will face increased payments, the situation is manageable, particularly as interest rates have continued to drop.
Ajai Bambawale, Chief Risk Officer at TD, told investors that roughly 64% of the bank’s mortgage customers are expected to see their payments decrease upon renewal in 2026. For those facing higher costs, the impact should still be within “within the B-20 stress [test],” he said.
For borrowers who do see an increase “it’s manageable,” he added, noting that it equates to roughly 3.5% of household income. “So, overall, I feel the book is strong,” he said.
Phil Thomas, Scotiabank’s Chief Risk Officer, shared a similar view. He said that since origination, the average mortgage payment has risen by approximately $200 per month, but that figure is expected to drop as more borrowers renew at lower rates. “Next year, that number goes down to about $130.”
Home equity and solid credit profiles provide a safety net
Beyond interest rates, lenders are also pointing to two key financial cushions: homeowner equity and credit quality.
Many Canadians, particularly those with uninsured mortgages, have built up strong equity positions over the years. CIBC CFO Rob Sedran said the bank’s average loan-to-value ratio on its uninsured mortgage portfolio is just above 50%, while impaired loans sit closer to 60%. “So there’s a lot of room there to absorb some of the impairment and not have to worry too much about losses,” he said. “Our net write-off rate is less than 1 basis point.”
RBC, meanwhile, is leaning on the strength of its borrower profiles. The average credit score across its mortgage book is close to 800, a number that reflects strong repayment ability. While the bank acknowledged ongoing strain in areas like Windsor, where they are seeing a “greater pressure,” executives believe the broader mortgage portfolio remains solid.
“Overall, everything is still in line with our expectations for the book,” said Katherine Gibson, Chief Financial Officer.
Stability takes precedence as banks ease off mortgage growth
As they work through the mortgage renewal cycle, banks are also rethinking how they approach lending, moving away from chasing market share and focusing more on maintaining healthy margins and strong credit standards.
National Bank used its time at the Barclays conference to highlight its expanding U.S. presence through Credigy, its specialty finance arm. The bank is focusing on structured residential mortgage credit among high-credit-score, low-loan-to-value borrowers.
According to investor materials and recent commentary, the strategy emphasizes credit performance and selectivity over volume growth, an approach the bank believes will hold up well, even in a more challenging macroeconomic environment.
Canadians still grappling with high housing costs
Even as banks take a more measured approach, housing affordability remains a major concern for many Canadians. RBC’s latest affordability index shows that while ownership costs have returned to more typical levels in the Prairies, cities like Toronto, Vancouver, and Victoria remain among the least affordable in the country.
Nationally, the share of median household income needed to cover homeownership costs has declined—from 63.5% in late 2023 to 53.6%—but remains well above pre-pandemic levels, with slowing wage growth also limiting the benefit of lower interest rates.
Scotiabank’s Phil Thomas suggested the coming years will be more about steady adjustment than quick relief, noting that while affordability remains strained, some early signs of improvement are beginning to emerge.
Bank-by-bank highlights
TD
- 64% of 2026 renewals will see lower payments; most others still pass the B-20 stress test.
- Average increase works out to just 3.5% of borrower income.
- Condo exposure of $62 billion (about 15% of the book) shows delinquency rates in line with the broader portfolio.
- Developer loans total just $2.5 billion, with strong presales and diversification.
Scotiabank
- Mortgage delinquencies stable overall; variable-rate book improving while fixed-rate shows mild increases.
- Average mortgage payment up about $200 a month since origination, expected to fall back to ~$130 by 2026.
- Younger borrowers (ages 15–24) showing more strain due to higher unemployment rates, but represent only 1–2% of the portfolio.
- Markets pricing in future rate cuts viewed as supportive for repayment capacity.
CIBC
- Mortgages account for roughly 10% of Personal & Business Banking revenue, or about 4% of enterprise revenue.
- Delinquencies at 36 basis points; net write-offs under 1 basis point.
- Average uninsured LTV just over 50%; impaired mortgages closer to 60%.
- Bank emphasizing margin over volume; net interest margin supported by balance-sheet hedging, product mix and Costco credit-card partnership.
BMO
- Expects rate cuts to ease renewal pressure; macro backdrop seen as more supportive than at the start of the year.
- Impaired PCLs down to 45 bps in Q3, from 66 bps in late 2024; ACL coverage about 70 bps.
- Performing provisions have slowed to ~$25 million, after nearly $900 million built over the past year.
- NIM up 16–17 bps year-over-year, with another 2 bps added in Q3; helped by rolling off term deposits and repricing higher-cost funding.
- Noted unsecured Canadian consumer loans could see further pressure, though they remain a small portfolio.
National Bank
- U.S. subsidiary Credigy expanding its structured mortgage credit portfolio, with strong Q2–Q3 momentum.
- Focus remains on high-FICO, low-LTV U.S. residential borrowers; no CRE or multifamily exposure.
- Growth targeted at 5–10% annually, flexing higher during market dislocations.
- Entire model operates B2B, sourcing assets through partnerships rather than direct consumer origination.
RBC
- Average FICO score across the mortgage book near 800, underscoring credit quality.
- Ontario—and Windsor specifically, due to auto sector weakness—flagged as a pressure point.
- HSBC integration expected to provide $300 million in revenue synergies, particularly in mortgages and cross-selling.
- AI investments expected to generate $700 million to $1 billion in enterprise value by 2027.
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Last modified: October 31, 2025