2026 mortgage renewals in B.C. should be manageable, say experts

'It’s not doom and gloom'

Photo: Rob Kruyt, BIV.

Mortgage default rates are rising in B.C. according to the Canada Mortgage and Housing Corp., but they still remain a fraction of one per cent.

Many British Columbians obtained five-year mortgages in 2021 to take advantage of historically low rates during the COVID-19 pandemic, and they are now facing higher monthly payments upon renewal.

The current five-year fixed rate is 3.84 per cent compared to 1.39 per cent in January 2021, while the current five-year variable rate is 3.35 per cent compared to 0.99 per cent in January 2021, according to Jan. 27, 2026 data from Ratehub.ca for insured mortgages.

Another group took out shorter three-year mortgages in 2023, when interest rates were higher than today. These people could now see a decrease in their interest rate and monthly payment, said Rebecca Casey, president of the Canadian Mortgage Brokers Association - British Columbia.

The 2021 cohort bought before the peak of the market in terms of values, she said. They may have seen their property value rise to a degree, giving them more tools to alleviate the jump in payment.

The 2023 folks did not experience that same level of price appreciation, she said. While they may be able to snag a lower rate, they may not have the same options for debt consolidation or overall change in their cash flow.

Default rates, historically very low in Canada, are creeping up.

B.C.’s mortgage delinquency rate was 0.19 per cent in the third quarter of 2025, according to the Canada Mortgage and Housing Corp. (CMHC). This measures the share of loans that are 90 or more days past due, and has been trending up since the low of 0.10 seen in the second half of 2022.

In the Vancouver region specifically, the delinquency rate was similar at 0.18 in the third quarter of 2025, up from a low of 0.8 per cent seen in the second half of 2022 and early 2023.

“We are seeing higher levels of it than we have historically, but it’s still important to note that it’s still low,” Casey said.

“It’s not doom and gloom. … There are options and it doesn’t have to be a terrifying experience.”

Clay Jarvis, mortgage expert with NerdWallet Inc., said people who took out mortgages in 2021 have likely paid off $100,000 or more since then, making the math more favourable. They may also be earning higher wages than they did five years ago.

If a person’s interest rate doubles from two to four per cent, this doesn’t mean that their monthly payment will double, he noted.

“It’s going to increase, but you are renewing a smaller loan, so you don’t necessarily have to freak out quite as much,” he said.

Penelope Graham, mortgage expert with Ratehub Inc., said borrowers are protected by stress tests, meaning they should theoretically be able to carry their mortgage at a rate two-per-cent higher than what they actually get from their bank, providing a bit of a buffer.

The 2024 federal budget enhanced the Canadian Mortgage Charter, which contains guidance for banks dealing with vulnerable borrowers. Standards include temporarily extending the amortization period and waiving interest on interest, according to an April 2024 summary by Gowling WLG.

The charter, which can form the basis for consumer complaints to the Financial Consumer Agency of Canada, exempts insured mortgage holders from requalifying under the stress test when switching lenders at renewal, the law firm said.

Steve Ng, mobile mortgage specialist district manager with Toronto-Dominion Bank (TSX:TD), said some borrowers can consolidate credit cards, auto loans and lines of credit into their mortgage when it comes due. They can also use a home equity line of credit that is secured by the home to reduce overall interest costs.

The Bank of Canada’s policy rate determines variable rates, while bond yields determine fixed mortgage rates, he said.

Canada-U.S.-Mexico (CUSMA) trade negotiations could potentially affect variable rates, but TD is currently not anticipating any drastic moves by the Bank of Canada, Ng said.

For fixed rates, bond yields suggest economic growth could improve toward the end of 2026, which could lead to inflation and an uptick in rates, he said.

NerdWallet’s Jarvis said he doesn’t see anything in bond yields to indicate significant movement in fixed mortgage rates in the immediate future.

“Trying to predict fixed rates going months or years in advance is a fool’s errand,” he said.