Higher payments: 60% of Canadian mortgages set to come up for renewal within the next three years

In Canada, mortgages are renewed every 1-5 years with interest rate being updated.

60% of the Canadian mortgages are set to renew for the next 3 years. (See image below)

These homeowners (myself included) will face a payment shock due to higher interest rate.

On one hand, this seems like a concerning issue as inflation causes the disposable income of Canadians to go down significantly.

If interest rate does hold at the current level, many Canadian homeowners may be forced to sell their home.

However, I don't think this is a problem.

In 2024, inflation will be coming down to 2-3% range.

This means Bank of Canada will have the breathing room needed to lower the interest rate.

The current forecast is to lower interest rate in summer or late 2024. This will allow a lot more home owners to refinance at a lower rate which should advert the housing deflation crisis in Canada.

So in other words, the housing shortage in Canada will continue but prices will likely either be flat or increase.

Cheers,

Eric Seto, CPA, CIM

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