Bracing for Impact: Preparing for the Wave of Mortgage Renewals in Canada

Bracing for Impact: Preparing for the Wave of Mortgage Renewals in Canada

The low mortgage rates offered in Canada between 2019 and 2021 led to a large number of first-time mortgages and renewals during these years. Due to this, 2024, 2025 and 2026 have an estimated 60% of Canadian mortgages set for renewal. Mortgage brokers in Canada should be prepared for this incoming wave with essential insights and strategies to help clients adapt.

Although the interest rates at the time of each renewal are unknown, it can be assumed based on current rates that there will be an increase in refinance and renewal rates in the coming months and years. As such, clients are likely to face increased mortgage payments on their fixed-term mortgages. Taking the time to prepare clients for the likelihood of increased costs is the best approach. 

Key Challenges for Mortgage Brokers:

  1. Client Anxiety and Uncertainty: Many homeowners are concerned about the potential for significantly higher monthly payments due to the increased rates. This can lead them to hesitate or make poor decisions based on fear. Mortgage brokers should be offering calm, clear and strategic guidance to their clients as the renewal dates approach.  
  2. Complex Client Needs: Every client will have a unique financial situation and the increased monthly payments will impact them differently. Having a range of options to help their particular situation can help position brokers as knowledgeable experts and valuable partners in mortgage transactions.  
  3. Balancing Affordability: Facing higher interest rates and mortgage payments can impact affordability for clients. Finding ways to help clients balance their budgets, such as refinancing to include debts and free up cash flow, or extending their amortization periods to lessen monthly payments, is crucial.

Strategies for Success:

  1. Educate and Inform: Provide clients with the knowledge they need about market trends and potential rate changes. Use newsletters, webinars, personal consultations and social media posts to keep them informed.  
  2. Early Engagement: Proactively approach clients with upcoming renewals; don’t wait for them to reach out first. Starting discussions early can help them understand all their options and make informed decisions without the pressure of urgent deadlines. 
  3. Explore Alternative Solutions: Standard mortgage renewals are not always the best option. Touch base with clients about their financial goals and consider alternatives that better align with their goals, such as longer amortizations, consolidating debt or switching rate types. 

While there are challenges with the wave of upcoming mortgage renewals, there is also significant opportunity. Putting in the effort to provide exceptional service, being proactive with communication and offering tailored solutions can turn this period of uncertainty into a time of growth and stronger relationships with clients.