People in Toronto can't afford their mortgages anymore and it's a problem

Historic low pandemic-era mortgages seemingly opened up the competitive Toronto real estate market to the masses, but with the renewal wave for these low-rate mortgages now nearing its end, a storm is brewing that has left many homeowners fearing the future.

The final five-year, fixed-payment mortgages doled out during the pandemic will soon come up for renewal, meaning a huge rate hike for the approximately 12 per cent of all outstanding mortgages in Canada.

According to a recent Royal LePage survey, conducted by Burson, these conditions have fostered anxiety among homeowners in markets across Canada, with Toronto expected to be among the hardest-hit.

"The pandemic-triggered era of ultra-low rates came to an abrupt halt in early 2022, having lasted less than two years," said Phil Soper, president and CEO, Royal LePage.

"While many Canadians who secured record-low mortgages during this period have already navigated their renewals, the final major group of rock-bottom rate holders are up for renewal, and understandably, they are concerned," added Soper.

The survey found that a whopping 39 per cent of respondents in Toronto said that they "feel more anxious than they did at their previous renewal."

Delinquencies are also on the rise in Toronto, jumping from 0.20 per cent to 0.29 per cent between Q4 2024 and Q4 2025, one of the largest increases recorded among major markets.

Zooming out to the broader provincial housing market, 39 per cent of respondents in Ontario noted that they were expecting an increase in their monthly payments.

"Many feared that mortgage renewals in this period would be significantly worse for a lot more Canadians. The reality is much less scary: the mortgage stress test has actually saved a lot of households from being in a far more difficult position," said Tom Storey, sales representative and head of The Storey Team, Royal LePage Signature Realty in Toronto. 

"That said, a certain percentage of homeowners simply won't be able to afford their renewal and will be forced to sell. In Toronto, we're already seeing power of sale occurrences increase compared to previous years, and this is usually a lagging indicator. Even when we get past the final wave of the hardest-hit mortgage renewers, we could still see a steady stream of defaults for a year or so afterward."