Homeowners with five-year fixed-rate mortgages expiring next year make up about 12 per cent of mortgages in Canada. Photo by Michael Steele /Getty Images

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More Toronto homeowners could face challenges next year at mortgage renewal if they need to refinance at the same time, a new report has found. The Bank of Canada’s Financial Stability Report 2026 found that about nine per cent of borrowers in the Toronto area would not be able to refinance their mortgage upon renewal.

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In contrast, the percentage of all Canadian borrowers facing a similar challenge is about four per cent.

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The central bank explains the situation for Toronto homeowners results from declining home values, higher interest rates and borrowers’ elevated total debt levels.

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It noted that many Toronto households struggle with high debt relative to income, leaving them vulnerable to cost increases and job loss.

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The Bank of Canada added that homeowners with five-year fixed-rate mortgages expiring next year — about 12 per cent of mortgages in Canada — will face an average 15 per cent increase in payments due to higher interest rates.

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While conditions are challenging, most renewers will be able to refinance, which often involves restructuring the terms by increasing the amortization and rolling higher interest credit card debt into the mortgage, TD Economics stated in a related report.

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But Toronto renewers face more of a challenge because of the significant decline in real estate values, especially for condominium apartments in recent years. It cited Greater Toronto Area home values are 26 per cent below their peak in 2022. Consequently, some borrowers may no longer meet the equity requirement — 80 per cent loan-to-value — required to refinance.

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TD further added these borrowers can still likely renew their mortgage with their existing lender, but they may be challenged to find better rates and terms.

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