Rising living costs, U.S. tariffs and Canada’s countermeasures, a slowing labour market—Canadians have plenty of reasons to worry today. Added to that is the need to renew mortgages; however, according to a new Royal LePage survey, Quebecers approach this stage somewhat more calmly than Canadians overall.
In brief
- 33% of Quebecers say they feel more anxious about renewing their mortgage now than last time.
- 35%.
- 39% of Quebecers expect their monthly mortgage payment to increase.
- 38%.
- 20% of Quebecers feel calmer than they did before their previous renewal.
- 12% of all mortgage loans in the country.
What’s happening with mortgages?
Over the next year, the last five-year fixed-rate mortgages taken out during a period of historically low interest rates will be coming up for renewal.
For many homeowners, this means moving to new lending terms and, accordingly, a potentially higher monthly payment.
However, the expected mortgage crisis of widespread non-payments that many feared after the sharp rate hikes has not happened so far.
This does not mean the situation isn’t creating problems for families. According to the survey, 65% of Quebecers believe an increase in their mortgage payment will be a significant financial burden for their family. Across Canada, 76% of homeowners share this view.
Why are Quebecers less anxious?
The difference from the Canada-wide figures isn’t huge, but it is noticeable.
In Quebec, 33% of respondents reported higher anxiety ahead of this mortgage renewal, compared with 35% nationwide.
At the same time, 20% of Quebecers said they are less worried than during their previous renewal. Across Canada, that figure is 17%.
According to Sean Brody, a broker with Royal LePage Altitude in Montreal, homeowners who took out a mortgage a few years ago at around 2% may now face an increase in their monthly payment by several hundred dollars.
But in his view, the situation is being helped by the home equity owners have built up, labour market conditions, and Quebec’s relatively more affordable housing market.
Why hasn’t a mortgage crisis happened yet?
Royal LePage President and CEO Phil Soper points to several factors.
Interest rates have already fallen noticeably from their post-pandemic peaks, and wages have continued to rise. As a result, some families are offsetting higher mortgage payments by cutting spending on other, non-essential purchases.
That is why, despite concerns, there has been no mass wave of mortgage defaults.
For some families, renewing their loan really does mean a major reshaping of the household budget. But for most borrowers, so far it is about adjusting spending rather than losing their home.
Where do Canadians get their mortgages?
Another interesting survey finding is the persistently extremely high share of the largest banks in the mortgage market.
In Quebec, 93% of borrowers have a mortgage with one of the country’s largest financial institutions: TD, RBC, CIBC, BMO, National Bank, or Desjardins.
Across Canada, the figure is 87%.
Share of alternative or secondary lenders:
- 4% of mortgages in Quebec;
- 8% across Canada overall.
Private lenders are used by:
- 2% of borrowers in Quebec;
- 4% nationwide.
What does this mean for homeowners?
Mortgage renewal is becoming a kind of budget stress test for many families. However, today’s situation differs noticeably from the most alarming scenarios that were discussed a few years ago.
Owners facing renewal will need to compare the new payment with their income and expenses. At the same time, the decline in rates from peak levels and wage growth partially soften the impact.
For Quebec, an additional factor remains the accumulated value of real estate: home equity gives owners a certain financial cushion.
The main takeaway from the latest data is simple: mortgage renewal remains a serious financial burden, but so far it has not turned into the kind of mass mortgage crisis that many feared after the sharp rise in rates.
