Financial stress builds ahead of mortgage renewals
Canadian households are facing growing financial pressure as mortgage renewals approach, even as a segment of prospective homebuyers signals readiness to enter the market, according to a new survey from TD.
The survey highlights a divided housing landscape, where existing homeowners are tightening budgets to cope with rising borrowing costs, while potential buyers are cautiously preparing to purchase homes despite ongoing affordability challenges.
Among homeowners expecting higher mortgage payments at renewal, 56% said they plan to reduce household spending, while 39% indicated they may rely more on savings or scale back investments. Financial stress is also widespread, with 67% of respondents reporting unease about their upcoming mortgage renewal.
In response to the uncertain rate environment, many homeowners are opting for stability. About 64% said they plan to renew their mortgages at fixed rates, with five-year and three-year terms emerging as the most popular options. Despite these concerns, relatively few borrowers—just 9%—said they intend to initiate renewal discussions earlier than required, suggesting limited proactive engagement with lenders.
At the same time, the survey found that prospective buyers are beginning to re-enter the market. Around 30% of respondents said they are more likely to purchase a home before the end of the year, driven largely by expectations of lower home prices (50%) and more stable interest rates (35%).
However, affordability remains a key constraint. Many prospective buyers are taking steps to strengthen their financial position, with 75% setting aside money monthly for a future purchase. Additionally, 52% said they are relying on investment income, while 48% are cutting non-essential spending to support their homeownership goals.
The survey also suggests that buyers may face structural challenges in financing their purchases. Nearly half expect to make down payments of less than 20%, potentially requiring high-ratio mortgages and default insurance. Meanwhile, a significant knowledge gap persists, with more than half of respondents indicating they are unfamiliar with home equity lines of credit.
Overall, the findings point to a housing market shaped by financial caution on one side and emerging demand on the other, as Canadians navigate higher costs while preparing for future homeownership.
