🤓 Nerdy Tip: Don’t expect your lender’s initial mortgage renewal offer to be a bargain. That’s why comparing the best mortgage renewal rates is an essential part of the renewal process.
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Disclaimer: These rates do not include taxes, fees, and insurance. Your actual rate and loan terms will be determined by the partner’s assessment of your creditworthiness and other factors. Any potential savings figures are estimates based on the information provided by you and our advertising partners. Mortgage Brokerage Licensed in ON #12984, BC #X301004, MB and AB. Homewise can pursue mortgage brokering activity in SK, NL, NS and NB.
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Canadian renewal mortgage rate update: January 2025
2025 is going to be a busy year where mortgage renewals are concerned. Over 1.2 million homeowners will be renewing their mortgages in the next 12 months, according to the Canada Mortgage and Housing Corporation.
To begin the year, homeowners are looking at much higher rates compared to those available in 2020.
| Rate Type | Average Posted Rate — April 1, 2020 | Average Posted Rate — January 1, 2025 |
|---|---|---|
| 1-Year Fixed | 3.29% | 7.24% |
| 3-Year Fixed | 3.94% | 6.54% |
| 5-Year Fixed | 5.04% | 6.49% |
| Prime | 2.45% | 5.45% |
Keep in mind that those are posted rates. The actual rates lenders are charging on renewals are much lower.
As of January 7, 2025, you could find three- and five-year fixed mortgage rates for less than 4.25%. A one-year fixed rate is over 5%.
Variable mortgage rates are currently as low as 4.3% at some mortgage brokerages, but are still closer to 5% at most large banks. Variable rates will continue shrinking with each Bank of Canada interest rate cut. The Bank could reduce variable rates by another 1% this year, depending on the state of the economy.
Explore more of Canada’s best mortgage rates
How to get the best mortgage renewal rate
There are two ways to secure the best rate on your mortgage renewal: using a broker or negotiating on your own behalf. The method you choose typically depends on where you expect to renew.
If you want to renew with a new lender: Use a mortgage broker
Renewing and requalifying with a new lender can be stressful, but with so many mortgages coming up for renewal in the next few years, competition in the renewal market could work to your advantage.
Finding the best rate when switching mortgage lenders, however, could require the services of a mortgage broker. Brokers have access to lenders from across the mortgage space — Big Six banks, credit unions, alternative lenders and private lenders. They can take care of the comparison shopping for you by weighing a larger number of offers.
🤓 Nerdy Tip: Many alternative lenders work exclusively with mortgage brokers, so even if you take care of the comparisons yourself, you may need to tag in a broker to get your application underway at the lender of your choosing.
If you want to renew with your current lender: Negotiate
It’s uncommon for lenders to offer reduced rates on mortgage renewals. They know that renewing with your current lender is the path of least resistance, and tend to charge higher renewal rates in exchange for the convenience.
You’re under no obligation to accept your lender’s first renewal offer, so turn it down and see if their second one is any better. If you’re dealing with a Big Six bank, for example, the initial rate offer might be closer to the bank’s posted rates. Counter by asking for a rate that’s more in line with its discounted or special rates.
No more stress test at renewal: Your rate is your rate
On November 21, 2024, the Office of the Superintendent of Financial Institutions provided guidance to the country’s federally-regulated lenders in anticipation of this year’s renewal wave.
According to OSFI, homeowners renewing their mortgages with a new lender are to be exempted from the mortgage stress test if they have an uninsured mortgage and are not making any changes to their mortgage amount or amortization period.
This brings uninsured mortgages in line with insured mortgages, which haven’t been subject to a stress test on switches since November 2023.
Your finances will still be put under the microscope if you switch lenders upon renewal. That’s unavoidable. But the rate used to determine what you can afford should be the one you’re offered, not the stress test’s minimum qualifying rate, which adds 2% to the contract rate.
Explore the Big Six to find the lowest renewal rate:
Estimating the cost of your mortgage renewal
A simple way to estimate the cost of your next mortgage term is to use a mortgage payment calculator:
- Enter your potential renewal details, including the new interest rate and any changes you may be considering to the amortization period, rate type or payment frequency.
- Compare the results to your current mortgage payment to find out how much more you could be paying upon renewal.
Running these numbers yourself can be helpful, but consider your lender or mortgage broker to be the ultimate source of truth when it comes to determining the cost of your renewal.
Frequently asked questions about mortgage renewal rates
It’s very likely that your mortgage interest rate will change when you renew. Renewal rates are based on lenders’ current mortgage rates, so if rates have risen or fallen since you signed your last mortgage, your next rate will almost certainly be different.
As of January 2025, many lenders’ renewal rates are no different than their purchase mortgage rates. Both three- and five-year fixed rates are a little above 4% at some brokerages, while variable mortgage rates are generally 5% or less, depending on term length.
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