B.C. Homeowners Face Mortgage Renewal Shock as Pandemic-Era Low Rates Disappear

Olivia Singh

10/9/20265 min read

For Port Moody homeowner Rob Preston, renewing a mortgage no longer carries the sense of accomplishment it once did.

Instead, his second renewal has become a source of anxiety.

“It’s so stressful,” Preston said.

“Knowing that these rates are so much higher than where we were at before, and trying to maintain a business, maintain a family.”

Preston, who owns a townhouse and runs a construction company that builds doctors’ offices, is part of a wave of Canadian homeowners now confronting the financial consequences of mortgages taken out or renewed when interest rates were at historic lows during the COVID-19 pandemic.

About five years after borrowing costs plunged, many of those mortgages are reaching renewal.

The rates homeowners are being offered today look dramatically different.

In April 2020, Canada’s prime lending rate stood at 2.45 per cent after the Bank of Canada cut its key policy rate to 0.25 per cent.

The prime lending rate now sits at 4.45 per cent, while the central bank’s policy rate is 2.25 per cent.

For homeowners carrying large balances, particularly in expensive markets such as Metro Vancouver, even relatively small differences in mortgage rates can translate into hundreds of dollars in additional monthly costs.

Preston expects his own payment could increase by somewhere between $600 and $1,200 a month, depending on the rate he ultimately secures.

Pandemic Mortgages Enter a Very Different Economy

The mortgage renewal wave was widely anticipated.

Borrowers who signed five-year mortgages in 2020 and 2021 were always going to face whatever interest-rate environment existed when those terms expired.

What was harder to predict was the broader economic environment they would be renewing into.

Mortgage professionals say homeowners are now dealing not only with higher borrowing costs, but also with other pressures on household budgets.

Reza Sabour, a senior mortgage adviser with TMG The Mortgage Group, said the current strain reflects a combination of expected rate normalization and economic shocks that were much harder to anticipate.

“The acute pressure that we’re seeing is a combination of that which was expected, but also mixed in with the trade war, which was unexpected,” Sabour said.

He pointed as well to higher global energy costs associated with the war in Iran and the closure of the Strait of Hormuz, which have contributed to renewed inflation pressures internationally.

Those factors can increase the cost of everyday necessities at the same time homeowners are being asked to absorb larger mortgage payments.

B.C. Showing Signs of Mortgage Stress

Recent credit data suggests some British Columbians are already struggling.

B.C. was among the three provinces recording the largest increases in mortgage delinquency between 2025 and 2026, according to an August report from TransUnion.

The province’s delinquency rate rose by four basis points over that period. Prince Edward Island recorded a five-basis-point increase, while Ontario increased by six.

Nationally, TransUnion characterized the rise in mortgage delinquency as modest.

But the report noted that borrowers in expensive real estate markets tend to carry larger mortgages, leaving them more exposed to affordability pressures and sudden increases in payments.

Matt Fabian, senior director of research and consulting at TransUnion, said the size of mortgages in markets such as Vancouver and Toronto makes higher rates particularly significant.

Home values in those markets are considerably above the national average, he said, which generally means larger loans and greater monthly payment obligations.

“As a result, the mortgages are larger and so the monthly payments are probably a little bit more stressful,” Fabian said.

Court-Ordered Listings Hit Decade High

Another sign of financial pressure is appearing in Lower Mainland real estate listings.

Between Jan. 1 and Sept. 30 this year, 946 court-ordered properties were listed across Greater Vancouver and the Fraser Valley, according to data compiled by property search platform Zealty.ca.

That figure is already higher than the full-year totals recorded in each of the previous 10 years.

Court-ordered listings are not all foreclosures. The data also includes properties being sold because of estate settlements, family law proceedings and bankruptcies.

Still, Zealty president Hamidreza Etebarian says he has noticed a change in the types of properties entering foreclosure proceedings.

Where foreclosures were previously more concentrated among apartments, condominiums and some townhouses, he said more single-family homes are now appearing.

“In the past it was more ... apartment, condo, little bit of townhouse,” Etebarian said. “Now we see a lot of single-family properties being foreclosed.”

Cheap Borrowing Encouraged Bigger Purchases

Etebarian believes some of the current stress can be traced back to the extraordinarily cheap borrowing environment of the pandemic.

When rates fell, buyers could qualify for larger loans and carry more expensive properties without necessarily facing dramatically higher monthly payments.

That helped make more expensive homes appear affordable.

But the calculations change when those same mortgages renew at significantly higher rates.

“The problem was the mortgages are very cheap, the interest rates are very low,” Etebarian said. “So people could afford or buy a more expensive property and now the interest rates are higher. They cannot afford it anymore.”

The effect can be particularly pronounced for borrowers who entered the market near the height of pandemic-era housing prices and still carry substantial mortgage balances.

The Renewal Shock

A mortgage renewal does not require a homeowner to purchase anything new or take on additional debt.

But the same outstanding loan can suddenly become much more expensive when its interest rate resets.

For households already dealing with elevated grocery, insurance, utility and transportation costs, several hundred dollars in extra mortgage payments can create significant strain.

An increase of $600 a month would amount to another $7,200 a year.

At $1,200 a month, the additional annual burden would reach $14,400.

That is the range Preston says he could be facing.

For families managing businesses, children and other debts, finding that money can mean cutting discretionary spending, drawing down savings, extending amortization periods or trying to restructure their loans.

For others, the financial pressure can become more serious.

Experts Say Homeowners Should Act Early

Financial counsellors and mortgage professionals say homeowners who suspect they may have trouble making their payments should not wait until they miss one.

Ali Harris-Saunders of the Credit Counselling Society said borrowers generally have more options when they begin addressing problems early.

“Having conversations with your lenders before financial difficulties become severe — it really does make a world of difference,” she said.

Lenders may have several ways to restructure payments depending on a borrower’s circumstances.

Those options can become more limited once payments are repeatedly missed or debts fall seriously into arrears.

Sabour said lenders generally have an incentive to find workable solutions rather than push homeowners toward default.

“But if you don’t reach out and you kind of let that ball keep snowballing and building, it’s going to feel a lot harder when things get more serious,” he said.

High Housing Costs Magnify the Problem

The renewal challenge is particularly significant in B.C. because housing prices have left many households carrying unusually large mortgage balances.

A homeowner elsewhere in Canada and a homeowner in Metro Vancouver may face the same percentage-point increase in their mortgage rate, but the dollar impact can be very different when one mortgage is substantially larger.

That exposure helps explain why analysts are watching provinces such as B.C. and Ontario closely as more pandemic-era mortgages reach maturity.

The current numbers do not suggest that most Canadian mortgage holders are defaulting.

But rising delinquencies, more court-ordered listings and growing concerns among borrowers indicate that a portion of households is increasingly stretched.

Five Years Later, the Math Has Changed

During the early months of the pandemic, emergency interest-rate cuts were designed to support an economy facing an unprecedented shutdown.

For borrowers, the result was access to some of the cheapest mortgage financing Canada had ever seen.

Those rates allowed some people to enter the housing market, refinance existing properties or purchase larger homes.

Five years later, the circumstances are profoundly different.

The mortgage still exists.

The house is still the same.

But for homeowners such as Preston, the monthly cost of keeping it could soon be significantly higher.

That has transformed what was once a routine mortgage renewal into one of the most consequential financial decisions many B.C. households will make this year.

For borrowers approaching that deadline, financial advisers say the most important step may be confronting the numbers early — before a difficult renewal becomes a financial crisis.

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