More Than Half of Canadians Expect Higher Mortgage Payments in 2025: Royal LePage Survey

As the Canadian housing market continues to evolve, homeowners are bracing for potential changes in their monthly mortgage payments. According to a recent Royal LePage survey, more than half of Canadians who are renewing their mortgages in 2025 expect their monthly payments to increase. This expectation is driven by a combination of factors, including historically low interest rates, rising housing prices, and shifting income levels.



Historically low interest rates have led many homeowners to secure mortgages at rates below 2%. However, the Bank of Canada's aggressive rate hikes to combat inflation have brought interest rates to a 22-year high. Although rates have been cut by 175 basis points since last spring, they remain significantly higher than when these mortgages were first contracted. As a result, homeowners renewing their mortgages will likely face much higher monthly payments.

Rising housing prices have also contributed to the expectation of increased mortgage payments. Despite the increase in interest rates, housing prices have remained relatively stable or even appreciated in some regions. According to the Royal LePage Market Survey Forecast (December 5, 2024), the aggregate price of a home in Canada is expected to increase by 6.0% year-over-year to $856,692 in the fourth quarter of 2025. This price appreciation, coupled with higher interest rates, has made it more challenging for some homeowners to afford their mortgages.

Shifting income levels have also played a role in the affordability of mortgages. Annual income growth exceeding 4% has improved borrowing capacity for some homeowners. As incomes increase faster than inflation, more buyers qualify for mortgages, and higher loan amounts become accessible. However, the affordability of mortgages will still depend on the interplay between interest rates, housing prices, and income levels.

To mitigate the impact of higher mortgage payments, homeowners can employ various strategies. Refinancing can help homeowners secure a more manageable payment plan by extending their amortization period, which reduces monthly payments. However, it's essential to consider the potential increase in interest costs over the life of the loan. Extending amortization periods can lower monthly payments, making it easier for homeowners to manage higher interest rates. Negotiating with lenders can also help homeowners secure better rates or terms to reduce the impact of higher mortgage payments. Exploring variable rate options can offer more flexibility and potential savings, especially if interest rates start to drop in the coming years. Budgeting for higher payments can help homeowners better prepare for increased housing expenses by reducing discretionary spending and prioritizing paying down high-interest debt.

In conclusion, more than half of Canadians renewing a mortgage this year expect their monthly payment to increase, according to a Royal LePage survey. This expectation is driven by a combination of factors, including historically low interest rates, rising housing prices, and shifting income levels. To mitigate the impact of higher mortgage payments, homeowners can employ various strategies, such as refinancing, extending amortization periods, negotiating with lenders, exploring variable rate options, and budgeting for higher payments. By being proactive and planning ahead, homeowners can better navigate the challenges of a changing housing market and ensure the long-term stability of their financial situation.