Irina Marshall | Accessible Mortgages

The 3 Warning Signs for Mortgage Default

Eric Majdalani — Thu, 26 Mar 2026 19:10:54 +0000

A recently released Bank of Canada report states that there are “three key patterns” to Canadians’ path to mortgage delinquency.

It comes as national mortgage debt continues to increase and as the cost of living continues to bite into consumer bank accounts.

As of November 2025, the report states that outstanding residential mortgage debt in Canada reached approximately $2.4 trillion, equivalent to nearly 73% of national gross domestic product and representing about 74% of total household debt.

This is an increase from the $2.3 trillion in July 2024, according to Statistics Canada.

The report gathered its information from TransUnion Canada borrower credit data representing roughly 80% of all household mortgages in Canada from 2015 to 2024.

What are the patterns?

The first pattern the Bank of Canada delves into is how “about two years before becoming delinquent on their mortgage, households begin to rely more heavily on consumer credit, such as credit cards and lines of credit.”

Scott Nazareth, a senior mortgage agent at Mortgages.ca, broke down where credit utilization can become an issue.

“Typically, credit reporting agencies will recommend that your credit utilization does not exceed 33% of the limit. Once you hit the 40-50% threshold, that’s typically where the warning signs start,” he said.

In comparison to non‑delinquent cohorts, this remained stable over the same period, stating that “there is a noticeable difference in credit utilization levels between households that will default and those that remain current on their mortgage payments.”

Credit card delinquency rates were found to be up by 20%, while the “credit utilization rate rises by six percentage points on average as the mortgage delinquency event nears.”

“If you’re not paying off those balances and you’re running a balance, that’s typically the first sign that there is some financial stress,” said Nazareth.

“If you miss one payment, especially if you miss two or three payments, even if they are over the course of a year, it really shows the pattern of a downward spiral.”

“You may miss one payment, and you start to miss a couple more, and it really spikes at six months out, and that was really surprising to me,” he said.

“It’s basically like you enter into a crisis in that last half of a year.”

The Bank of Canada cites another pattern as “about one to two years before mortgage delinquency, delinquency rates on non‑mortgage credit products begin to increase.”

It was also found that credit card delinquency rates began increasing the earliest, which was followed by other credit products such as auto loans, home equity lines of credit (HELOC), lines of credit and instalment loans.

“The upward trend in both non‑mortgage delinquency and credit utilization rates intensifies as mortgage delinquency approaches.”

In addition, the report also states that mortgage borrowers “typically hold multiple forms of credit,” as approximately 90% “have at least one credit card and more than one‑third hold auto loans or unsecured lines of credit.”

“We start looking at missed payments as the second warning sign of despair or financial stress, and that could be one to two missed payments across different cards,” said Nazareth.

“What that will also result in is a decline in options for consolidating debt because once you start missing payments, your credit score will decline.”

The last pattern the study highlights is how “about six months before mortgage delinquency, both the pace of non‑mortgage delinquencies and the growth in credit‑utilization rates pick up sharply.”

“In the final six months before a mortgage delinquency, you’ll usually start seeing many more missed payments and a higher utilization above the 40-50 per cent, maybe close to maxing out the cards, at which point is close to the feeling of drowning or sinking,” said Nazareth.

Legg also stated that “the whole report shows that this is why banks take credit scores seriously.”

“The biggest takeaways are that as soon as you start relying on credit for things like groceries or relying on credit for your mortgage, that’s the sign to talk to a financial advisor or a mortgage agent,” he said.

Almost half (46%) of Canadians have seen an increase in their debt over the last year, as more than half of those who said their debt has increased (52%) said they lost sleep over debt in 2025, while 34 per cent said it has made them physically ill.

In Canada, auto loan delinquency rates for younger drivers rose by 30 per cent on auto loans, compared to the overall rate, which saw an increase of 15.3%

It is a similar story in the U.S., as the Federal Reserve Board states that “30-day-plus delinquencies on credit card balances have risen steadily since late 2025, crossing levels last seen before the pandemic stimulus era.”

Higher minimum payments and interest rates are also above 20% for many cardholders.

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This Summer… Make Or Break for Canada’s Housing Market?

Eric Majdalani — Fri, 13 Mar 2026 15:18:13 +0000

The US Supreme Court’s decision to strike down a large portion of Donald Trump’s tariffs last week doesn’t seem likely to change the picture much for Canada when it comes to the ongoing trade war.

But that tariff dispute, which has proven hugely impactful on the national housing market and homebuyer confidence, could face a day of reckoning by July 1.

That’s the cutoff point for review of the Canada-US-Mexico Agreement (CUSMA), a wide-ranging trade deal struck between the three North American allies that’s protected many Canadian industries and exports from the tariff wave Trump launched last year.

The current US tariffs exempt exports covered by CUSMA, meaning Canada has been spared much deeper trade pain – even if the tariffs have battered other sectors like steel, aluminum and automobile manufacturing.

Economists have long flagged the enormous significance of the looming CUSMA review, whose outcome could shape the outlook for Canada’s housing market and wider economy for the remainder of the year.

Those negotiations, and the prospect of Trump suddenly walking away from the deal, make it far more noteworthy than last week’s Supreme Court decision, according to Servus Credit Union chief economist Charles St-Arnaud (pictured top).

“We have bigger concerns coming up this summer with the review of CUSMA,” he told Canadian Mortgage Professional when asked on the possible impact of Friday’s decision. “That will be more consequential in terms of what’s going to happen with tariffs.”

Exemptions have cushioned the blow of Trump’s trade war

Canada’s economy isn’t exactly booming, and certain industries have staggered under the weight of Trump’s tariff regime.

But its condition would be far worse, St-Arnaud pointed out, if it wasn’t for the wide-ranging CUSMA exemptions the Trump administration introduced last year.

“We’re doing OK – not great,” he said. “We need to put it in terms of context. If we compare to where we thought we would have been a year ago, we’re in much better shape. But it’s still not great. It seems like the economy is really at a standstill.

“In terms of growth, in terms of domestic demand, it’s still sluggish. We’re hoping for some improvement in 2026, but it will remain kind of a modest improvement in terms of economic activity this year.”

Hopes of a Canadian housing market recovery in 2025 were dashed when Trump announced his tariff plans, plunging the economy into uncertainty and keeping would-be homebuyers on the sidelines amid fears of job losses and an economic downturn.

If the notoriously trigger-happy Trump walks away from CUSMA in the months ahead, that could cause further chaos, opening the possibility of even wider-ranging tariffs with many industries no longer protected.

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How Does A Construction Mortgage Work?

Eric Majdalani — Wed, 25 Feb 2026 15:58:29 +0000

Building your own home or buying one from a custom builder will likely require taking out a construction mortgage.

Construction mortgage loans are an entirely different ball game than typical residential mortgages. Before you take a swing at building your own home, it’s important to know the rules.

What is a construction mortgage?

A construction mortgage, sometimes referred to as a builders mortgage, is a way to fund the purchase of a home that may not exist yet. A construction mortgage can be used whether you’re building a property yourself or purchasing a custom-built home from a developer.

(Some lenders may use the terms “construction mortgage” and “builder’s mortgage” interchangeably, while others consider them distinct types of loans.)

Like a residential mortgage, a construction mortgage loan requires a down payment and can come in fixed or variable-rate options.

In some cases, a construction loan will automatically convert to a traditional mortgage once building is complete and a certificate of occupancy has been obtained.

How a construction mortgage works in Canada

The main difference between a construction mortgage and a more traditional type of mortgage is the way the funds are paid out.

Unlike a typical mortgage, which is paid as a lump sum on closing day, a construction mortgage is paid out in smaller increments, or “draws,” as each phase of construction is completed.

While a construction loan is in the draw phase, some lenders may only require you to pay interest on the amount borrowed. Once construction is done, payments of both principal and interest will be required.

When financing a build with a construction mortgage, inspections are required at each step before the next draw will be approved. The borrower is generally responsible for the cost of these inspections, although some banks may deduct the progress and inspection fees from each draw.

Sample draw schedule for a construction mortgage

Draw	Required percentage of completion	Construction state	% of total mortgage amount advanced
#1	15%	Excavation and foundation completed.	15%
#2	40%	Roof is on and the building is weather-protected with access secured.	25%
#3	65%	Plumbing and wiring have been started. Drywall and plaster are completed. A furnace has been installed, exterior wall cladding has been completed.	25%
#4	85%	Kitchen cupboards have been installed, bathrooms are completed, doors have been hung.	20%
#5	100%	Ready for occupancy. Seasonal and exterior work have been completed.	15%

How to get a construction mortgage

Construction mortgages are not as widely available as mortgages to purchase an existing home. It may be harder to find a construction mortgage offered by smaller lenders, such as credit unions, or in certain provinces.

Progress draw construction mortgages are also more complicated and require a lot of steps and checks along the way. For this reason, it’s wise to find a mortgage broker or bank that is familiar with this type of mortgage and can guide you through the process and explain all the steps.

Since construction mortgages do come with more risk, you may have to meet stricter requirements to get approved. This goes beyond the typical minimum credit score and reliable income that is required for a traditional mortgage.

Lenders also need to be assured that the project will be completed within a certain time frame and that the builders are licensed and have a history of well-built homes, among other things. A larger down payment, like 25% to 30% of the total mortgage amount, may be required to be approved for a construction mortgage.

Examples of construction loan providers in Canada

Credit Unions. Meridian Credit Union and Conexus Credit Union offer construction mortgage loans to home builders in Ontario and Saskatchewan, respectively.
CMHC. The Canada Mortgage and Housing Corporation provides construction loans for investors building apartments and affordable housing units.
Equitable Bank. Equitable Bank provides funding for homeowners interested in adding laneway homes to their properties.
Big Six banks. Some of Canada’s major financial institutions provide construction mortgages.

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What a Bank of Canada Rate Hold Means For Buyers, Sellers and Mortgages in 2026

Eric Majdalani — Wed, 11 Feb 2026 16:14:33 +0000

For buyers, sellers and those renewing their mortgage at the start of 2026, Canada’s housing market faces a very different interest rate environment compared to a year ago, with economists in general agreement that the Bank of Canada (BoC) will likely stay in a holding pattern.

“We don’t see the Bank of Canada moving at all,” CIBC economist Benjamin Tal told Yahoo Finance Canada in an interview. Mortgage rates, he adds, are likely at the lowest they will go.

That’s a far cry from a year ago, when further cuts were expected, mortgage rates were assumed to be on the decline and trade wars and related economic uncertainty — stemming from the policies of U.S. President Donald Trump — were still hypothetical.

Yahoo Finance Canada spoke with experts ahead of today’s BoC hold about how Canadians should handle different real estate scenarios in a year where rates, sales and prices are expected to remain more or less static. Their guidance, however, comes with a key caveat: trade disputes are no longer hypothetical, with U.S. unpredictability the wild card as the review of the Canada-U.S.-Mexico Agreement (CUSMA) nears.

“If we are all wrong and there’s going to be a major trade dispute… that’s something that will be recessionary for the Canadian economy and then all bets are off,” Tal noted.

First-time buyers: Time is finally on your side

The psychology of the market has shifted significantly. Asking rents in many markets remain high, but national average rents hit a 30-month low in December. That, coupled with high inventory and low expectations for price movement, takes much of the urgency away.

“People are not rushing and that’s a good thing,” Tal said. “That’s a normal market as opposed to a market that was panicking until very recently.”

This patience is vital in the condo sector, where a glut of inventory, most prominently in the Greater Toronto Area, has created a buyer’s market that demands strategic thinking. While prices in some markets may decline further in 2026, Royal LePage CEO Phil Soper advises buyers to factor that equity erosion into their offer. “It’s not hard math. It’s a little bit of spreadsheet work.”

“The window of refinancing is closed because prices… are actually lower than they were in 2021,” Tal said.

Sellers: Be realistic

Steve Ng, a Vancouver-based senior district manager and mortgage specialist at TD, notes that sellers’ perspectives often lag the market, with a fixation on property assessments that quickly become obsolete.

“You’re always thinking, ‘I could have got this, I should have got this, and maybe I still can get this,’” he said. “But the market is shifting.”

Ng notes that multiple offers are rare and financing conditions, once a deal-breaker, are now standard practice. “Now, we’re seeing conditional offers of 10 to 14 days,” Ng said. “The conditions have changed a little bit, and obviously in favour of the buyer.”

He warns that sellers chasing yesterday’s prices risk getting stuck with a stale listing for “six, eight, nine months,” bleeding money on utilities and taxes that eat into any eventual profit. Soper’s advice is to trust your broker and price for a clean exit.

“Price to market or you’re just going to make yourself miserable,” Soper warned. “The market is what the market is.”

Renewals: Explore your options. Early.

Although the BoC is expected to hold rates, Tal warns that 2026 is “the real test” compared to 2025. Borrowers who bought in 2021 are renewing into a market where their home might be worth less than what they paid, removing the safety valve of refinancing that saved many in 2025.

“Close to five per cent of all mortgages in Canada are going to face more than 40 per cent increase in mortgage payments,” Tal noted. “That’s not insignificant.”

In this environment, letting your mortgage auto-renew is a financial hazard. Ng advises borrowers to act aggressively, locking in a rate 120 days in advance. His warning is technical but critical — fixed mortgage rates track bond yields, not the BoC. Tal notes five-year fixed mortgage rates could begin to climb in the second half of 2026 as the bond market anticipates the BoC hiking rates in 2027.

“Don’t wait for that renewal letter to show up,” Ng warned, “because you know when that happens, [you’re] probably 30 to 60 days out, when you could have possibly booked a rate 120 days out.”

For those facing that 40 per cent payment shock, Ng notes that lenders want to help their clients survive, potentially by adjusting the amortization period or by looking at their total debt picture — consolidating high-interest car loans or credit card debt into the mortgage at renewal to lower the family’s total monthly debt payments.

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Why fixed mortgage rates may not move when the Bank of Canada does

Eric Majdalani — Thu, 29 Jan 2026 22:44:39 +0000

When the Bank of Canada (BoC) makes interest rate cuts, variable rate mortgage pricing typically moves, too.That’s because the central bank’s benchmark rate influences the interest rates that banks charge on variable rate mortgages, such as the TD Prime Rate, which impacts the interest rates on loans such as variable rate mortgages and home equity lines of credit (HELOCs).

So, if the BoC cuts its interest rate, banks typically follow, and lower their interest rate on variable rate products, too.

If the BoC hikes its interest rate, customers typically see higher interest rates on variable rate mortgages.

So why aren’t BoC rate moves reflected in the same way when it comes to fixed rate mortgage pricing?

Well, the BoC’s interest rate does influence fixed rate mortgages, but less directly.

Let us explain.

How fixed rate mortgages are priced

Fixed rate mortgages are products that have pricing locked in for a specific period of time. If you have a five-year fixed rate mortgage term, your interest rate and payments are set for the entire term. That means you won’t see any fluctuations in your interest costs, as long as you make all of your regular payments.

Rates for these mortgages are based on the bond market, not directly on the BoC’s interest rate. Banks typically use the Government of Canada bond yield as a benchmark for fixed rate mortgage pricing.

A bond is simply a loan from investors to a government or company that pays a fixed interest (or a “coupon”). It’s essentially a way for government or companies to borrow money directly from investors.

“So, when you buy a $1,000 bond, and it pays a coupon of 5%, you’re going to earn $50 in interest on an annual basis,” said TD Economist Maria Solovieva. “And importantly, when your bond expires, you also receive your $1,000 back.”

At the time of issuance, the coupon rate equals the bond’s yield. As market conditions change, the bond yield will also change.

That’s because bond yields reflect where the market is likely headed, based on economic factors such as inflation and expectations for the BoC’s interest rate. In other words, bond yields offer financial institutions a decent snapshot of where fixed rate mortgage rates should be priced in keeping with the future state of the economy.

So, while the BoC’s interest rate still matters, it affects fixed mortgage rates indirectly by shaping market expectations.

Deciding between a fixed rate mortgage and variable rate mortgage

It can be tough choosing between a fixed rate or variable rate, especially if you’re new to homeownership. There are factors to consider when determining which type of interest rate is right for you.

“If you sign up for a fixed rate term, your payment will be fixed for the next three or five years – however long the term of you mortgage is,” said Abbie Wang, a Senior Manager with the Real Estate Secured Lending team at TD.

“There is payment stability. There’s not going to be any volatility, regardless of how the market is moving.”

With a variable rate, on the other hand, your interest rate can fluctuate based on changes to your bank’s prime lending rate, which is influenced by the BoC’s lending rate.

For Canadians with variable rate mortgages, BoC rate cuts can mean more of their mortgage payment goes towards the principal of the mortgage, and less towards interest. Homeowners who have a variable rate mortgage with variable payments could see their total payment shrink.

“For first time homebuyers, I highly suggest looking at payment affordability instead of looking purely at interest rates,” Wang said. “It’s important people evaluate what will be the most comfortable situation in their budget to manage.”

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Big Bank Warns 2026 Might Prove Very Tough For Canadians Who Chose Variable Mortgages

Eric Majdalani — Fri, 16 Jan 2026 16:32:54 +0000

More Canadians jumped into variable mortgages in 2025 to take advantage of their lower rates, but doing so in 2026 might prove perilous, according to Desjardins.

“The recent enthusiasm for variable-rate mortgages may wane in 2026, especially if borrowers start anticipating new rate increases,” Hendrix Vachon, principal economist at Desjardins, said in a report.

Canadians have typically preferred five-year fixed mortgages, but he said variable options “have been gaining in popularity from 2024 onward,” estimating they made up 38% of new mortgage financing in October and 32 per of the total outstanding mortgages based on Bank of Canada data.

Rates.ca said in a report on Thursday that interest in variable mortgages has “steadily” increased, based on November financing requests made through the mortgage aggregator.

The interest rate for variable-rate mortgages was 3.97% at the end of October compared with 4.21% for all insured residential mortgages and 4.39 per cent for five-year and above fixed residential mortgages, according to the Bank of Canada.
That’s a big turnaround for variable rates, Vachon said.

In the wake of the pandemic, variable mortgage rates fell to a low of 1.5%, only to swoop to a high of 7.48% as the Bank of Canada began hiking interest rates to cope with soaring inflation.Unlike fixed mortgages, variable mortgage rates are just that — variable.

Mortgage rates are set based on the prime rate, with most people able to negotiate a discount that remains the same over the term of the mortgage, even though the rate changes with the prime rate.

But Vachon said the tide could be turning on variable rates, so borrowers could find themselves on the wrong side of the ledger.

“For 2026, the outlook is currently less favourable for variable rates,” he said.

The Bank of Canada recently said it was done cutting rates for the foreseeable future, with markets and economists increasing their bets that the central bank’s next move will be an increase.

Desjardins’ latest forecast called for two 25-basis-point rate hikes in 2027 and none in 2026, but markets are betting there will be one rate increase at the end of 2026.

Estimates for the long-term neutral rate, where borrowing levels neither stimulate nor restrict the economy, are set at 2.75%, or 50 basis points higher than the Bank of Canada’s current benchmark lending rate of 2.25%

If variable-rate mortgages become more expensive, Vachon said more borrowers will likely opt for three-to-five-year mortgages, which overtook the five-year option in fixed popularity.

“Before the pandemic, mortgages with these terms typically accounted for less than 20% of all mortgages before jumping above 50 per cent in 2024,” he said. “Right now, they’re still near 40%.”

For now, it’s no wonder more Canadians have taken the plunge with variable-rate mortgages, given that housing affordability is such a hot-button topic.

Displeasure with issues such as the overall cost of living and housing affordability among the sources of most premiers’ plummeting ratings, according to an Angus Reid Institute poll released on Thursday.

“Provincial governments have been viewed as performing poorly on issues such as health care, the cost of living and housing affordability, which have been among the top concerns for provincial residents in the past three years,” Angus Reid said in the poll release.

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Buyers Could Edge Back to Canada’s Housing market in 2026, says real estate giant

Eric Majdalani — Wed, 31 Dec 2025 17:32:40 +0000

Royal LePage’s latest market survey casts 2026 as a reset year rather than a rebound, with national prices barely higher and some of Canada’s priciest markets still under pressure.

The brokerage forecasts that the aggregate price of a home in Canada would rise 1% year over year in the fourth quarter of 2026 to $823,016, with single-family homes up 2% to $876,934 and condos down 2.5% to $563,918.

Royal LePage framed that outlook as the product of a turbulent 2025, marked by trade tensions with Washington, a change in Ottawa and four Bank of Canada rate cuts that pulled its policy rate down to 2.25%.

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The Bank of Canada’s rate cuts have failed to lift the housing market. What’s Next?

Eric Majdalani — Wed, 17 Dec 2025 16:44:23 +0000

Sixteen months of interest rate cuts should have jolted Canada’s housing market back to life. Instead, the sector has barely moved — and with the Bank of Canada (BoC) holding rates steady today, industry experts say the trade war’s shadow, not interest rates, will dictate where the market goes next.

The BoC has lowered its policy rate by 275 basis points since June 2024, taking it from five per cent to 2.25 per cent. Mortgage rates have followed: fixed-rate borrowing has fallen sharply from mid-2024 highs, and variable rates have recently dropped lower than fixed rates.

Yet, according to data from the Canadian Real Estate Association, sales activity and average prices are more or less even with where they were in early 2024.

“This Bank of Canada rate has come down massively from its peak,” said Ron Butler, a broker at Butler Mortgage. “Sales are still terrible, and prices keep coming down. It’s definitely a massive piece of the narrative, but [the BoC] doesn’t control the market at all.”

CIBC deputy chief economist Benjamin Tal says the housing market “actually hasn’t responded” to the deep interest rate cuts, “and I think that it’s not just about interest rates.”

The cuts, he says, kept Canada out of recession, but were overwhelmed by broader economic forces. “The economy as a whole is still struggling. The fog of uncertainty regarding Trump is a major factor impacting the psyche of the consumer.”

Even if the BoC were inclined to cut again in the future — something analysts widely doubt — Tal says the traditional link between cheaper borrowing and housing demand has weakened. “Interest rates are secondary here,” he said.

Stuck between lower rates and deeper fears

Butler, Tal and others describe a market defined by caution: prices drifting lower, sales volumes subdued, and no sense of urgency on either side of the transaction. National benchmark prices are still below where they were when the easing cycle began. Some of the heaviest declines have been in entry-level segments like condos and townhouses.

The pain isn’t distributed equally. Royal LePage CEO Phil Soper notes that while national figures look stagnant, they mask a “compression” in the market. More affordable regions like Edmonton and Montreal have seen meaningful activity, while the traditional engines of Canadian real estate — Toronto and Vancouver — are stalling, dragged down by prices that still remain out of reach for many.

The weakness in the entry-level market, says Soper, stems from the absence of the group that normally kickstarts a housing cycle. “The big missing piece… is the first-time home buyer,” he said, with surveys showing that trade-war uncertainty is holding them back.

Existing owners who might otherwise trade up are “out of sorts,” Butler says, because their realtors are telling them their homes are worth less than they expected. And renters hoping to buy “still can’t make the math work,” he adds, with prices too high relative to incomes.

“For most first-time homebuyers, the prices still have to come down or their incomes have to go up,” he said. “That’s it.”

At the same time, Butler says the investor class has evaporated. “Absolutely no one is buying a property to rent it out, to flip it, to renovate it. Zero. Gone.” Soper adds that federal caps on foreign students and temporary workers have hollowed out the rental demand that condo investors rely on.

The result is a market with fewer buyers, more hesitation, and transactions bogged down by the kind of conditions and inspections that vanished during the pandemic boom. “The buyer is much more judicious, much more careful, much more picky,” Butler said.

Interest rates vs. trade war

All three experts point to the U.S.–Canada trade conflict as the central force weighing on economic confidence.

Tal says the freeze in business investment offers a useful parallel for understanding household behaviour. “You can cut interest rates to zero — they’re not investing because you don’t know what will happen tomorrow with a tariff,” he said. One CEO told him the only thing they needed was clarity: “Give me a number. So at least I know where I am.”

Beyond the external threat of tariffs, Tal points to a specific domestic headwind that will keep a lid on the recovery in 2026: a tougher mortgage renewal environment.

He says the renewal wave of 2025 was “much ado about nothing” because borrowers could refinance, but 2026 will be different. Homeowners renewing next year locked in rock-bottom rates in 2021, and in markets like Ontario and B.C., their home values have since dipped — removing the refinancing cushion they might have relied on.

Tal estimates this affects about 5.5 per cent of outstanding mortgages, a group he says will face a “significant” payment shock of 40 per cent or more.

When will the market unfreeze?

Both Soper and Tal say that even without a resolution to the trade conflict, the psychological shock it imposed will fade — just as pandemic fears did in late-2020, with the market rebounding long before vaccines arrived (though that trend was also driven by a move out of cities).

“People get used to it, people adjust, people adapt,” Tal said. At the margin, that can draw some buyers back.

Tal and Soper both see U.S. political realities driving a potential end to the trade conflict next year — an outcome Tal says would lead to a marked improvement in the housing market. Change, though, is generally expected to be gradual. Butler sees no chance of a price surge next year. Soper expects transaction volumes to keep rising only gradually. Tal foresees 2026 as a “transition year” — slow in the spring, better in the fall, and still heavily shaped by whether tariff uncertainty clears.

“The uncertainty is a major factor,” Tal said. “And that’s why this fog is so thick.”

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30 Year Amortization: The Good & The Bad

Eric Majdalani — Fri, 28 Nov 2025 16:23:28 +0000

Whether you’re a first-time buyer stretching to enter the market or an existing homeowner looking to refinance, the structure of your mortgage is critical. While interest rates get the spotlight, the amortization period is the silent engine of your loan, determining your monthly payments and the total cost of borrowing. One of the most common strategic questions we encounter is whether to opt for a 30-year amortization in Canada.

The appeal is obvious: lower monthly payments. But this short-term relief comes with significant long-term costs. This guide will provide a clear and balanced analysis of the pros and cons in both a purchase and a refinance context. We will cover:

The crucial CMHC rules that determine who is even eligible for this option.

How a long amortization impacts your monthly payments and total interest cost.

The effect on your long-term equity growth.

A strategy to get the best of both worlds.

First, What is a Mortgage Amortization Period?

Before we can compare, let’s quickly define our terms. In the mortgage world, it’s common to hear “term” and “amortization” used together, but they represent very different concepts.

The Term: This is the length of time your specific mortgage contract is in effect. A five-year fixed term is the most common in Canada. During this period, your interest rate and other conditions are locked in. At the end of your term, you must renew your mortgage, at which point you can renegotiate your rate and other conditions or switch lenders.

The Amortization: This is the total lifespan of your mortgage loan. It’s the total amount of time it will take to pay off the entire loan balance to zero, assuming you only ever make your regular, required payments.

Think of your mortgage as a long journey—the amortization is the total distance from start to finish (e.g., 25 or 30 years). The term is just one leg of that journey (e.g., 5 years). After each 5-year leg, you get a new contract for the next leg, until the entire journey is complete. The 25-year amortization became the industry standard for insured mortgages as a measure by the Canadian government to ensure borrowers weren’t taking on debt for an excessive period, promoting financial stability.

Who Can Get a 30-Year Amortization?

This is the first and most important hurdle, as not every borrower in Canada is eligible to stretch their mortgage over 30 years. The rules are strict and depend entirely on the amount of equity you have in your home, which is why the context of a purchase versus a refinance is so important.

For a New Home Purchase

When you buy a new home, the determining factor is the size of your down payment. According to the federal government and CMHC rules, if your down payment is less than 20% of the home’s purchase price, your mortgage is deemed “high-ratio” and must be insured against default by CMHC or a private insurer. For any insured mortgage, the maximum allowable amortization period is 25 years. This is a firm, non-negotiable rule designed to protect the housing market from borrowers taking on too much risk. To be eligible for a 30-year amortization on a new purchase, you must provide a down payment of at least 20%, making your mortgage “conventional” or uninsured.

For a Mortgage Refinance

The rules are different when you refinance. A refinance is any new mortgage on a property you already own, whether to access equity, consolidate debt, or change your rate mid-term. By definition, all refinances in Canada require the homeowner to have at least 20% equity in their property. Because of this, refinanced mortgages are always considered conventional and do not require default insurance.

This means that if you are refinancing and have at least 20% equity, you are eligible to extend or “reset” your amortization period to 30 years. This is a powerful tool for existing homeowners looking to restructure their finances.

The Primary Advantage: Lower Monthly Payments

The single biggest reason anyone chooses a 30-year amortization is to reduce their monthly mortgage payment. By stretching the same loan amount over an additional five years (60 extra payments), each individual payment becomes smaller and more manageable.

How it Improves Cash Flow: A Clear Example

Let’s look at the real-world numbers. Imagine you need a $600,000 mortgage and you’ve secured a fixed interest rate of 5.0%.

25-Year Amortization: Your monthly principal and interest payment would be $3,495.

30-Year Amortization: Your monthly principal and interest payment would be $3,199.

That’s a difference of $296 every single month, or over $3,500 a year. This isn’t just a small saving; it’s a significant boost to your monthly cash flow. For a family, that extra money could mean:

Fully funding a child’s RESP.

Making a car payment.

Building a robust emergency fund faster.

Simply reducing the financial stress that comes with being “house poor.”

The Strategic Benefit: Easier Qualification

This lower monthly payment has another powerful benefit: it can make it easier to qualify for the mortgage in the first place. Lenders use your projected mortgage payment to calculate your Debt Service Ratios (GDS and TDS), which are strict measures of your ability to handle your debts.

Let’s imagine a family with a gross annual income of $120,000 ($10,000/month).

With the 25-year payment of $3,495, their GDS ratio might be too high for the bank’s guidelines, leading to a decline.

With the 30-year payment of $3,199, that lower amount might be just enough to fit within the bank’s allowable debt ratios, resulting in an approval.

For both purchasers trying to enter the market and homeowners refinancing to consolidate debt, the 30-year amortization can be the key that unlocks an approval.

The Significant Drawbacks: The Long-Term Costs

That monthly breathing room comes at a very steep long-term price. The drawbacks of a 30-year amortization are significant and can impact your financial future for decades.

The Shocking Difference in Total Interest Paid

This is the most important trade-off. A longer amortization means you’re in debt longer, and you will pay much more in interest.

Let’s go back to our $600,000 mortgage at 5.0%:

25-Year Amortization: Over the life of the loan, you would pay a total of $448,531 in interest.

30-Year Amortization: Over the life of the loan, you would pay a total of $551,575 in interest.

By choosing the 30-year amortization, you would pay $103,044 more in interest for the exact same house. This isn’t just a small cost; it’s the price of a luxury car, a child’s university education, or a significant boost to your retirement nest egg, all paid directly to the bank. This is the opportunity cost of lower monthly payments—that extra interest is money that you can’t use to build your own wealth.

Slower Equity Growth and Its Consequences

Equity—the portion of your home you truly own—is your most powerful wealth-building tool. A longer amortization means you build this equity at a painfully slow pace, especially in the early years.

Let’s look at our example again after five years (at the first renewal):

25-Year Amortization: Your remaining mortgage balance would be $527,117. You would have paid down $72,883 of your loan.

30-Year Amortization: Your remaining mortgage balance would be $551,803. You would have only paid down $48,197 of your loan.

After five years, the person with the 25-year amortization has $24,686 more equity in their home. This slower equity growth isn’t just a number on paper; it has real-world consequences. It can limit your options in the future. If you need to access funds for an emergency or an investment opportunity, you may find you don’t have enough equity to qualify for the HELOC or refinance you need.

The Psychological Weight of Debt

Finally, there’s the psychological impact of being in debt for an extra five years. It can delay your ultimate goal of financial freedom, impact your ability to retire on your own terms, and keep the weight of a mortgage payment on your shoulders for longer.

When is a 25-Year Amortization Simply Better?

Even with the “Best of Both Worlds” strategy (which we’ll cover next), some individuals are better off with the discipline of a standard 25-year amortization. This approach is superior if you value “forced savings.” The higher payment forces you to pay down your principal faster, building equity and reducing your total interest cost without requiring extra, voluntary steps. If you know you are the type of person who will spend any extra cash flow rather than using it to pay down debt, the rigid structure of a 25-year plan can be a powerful tool for building wealth faster.

The “Best of Both Worlds” Strategy

So, how do you choose? For many of our clients, we recommend a strategy that captures the advantages of both structures.

The strategy is simple:

Structure the mortgage with a 30-year amortization. This provides the lower contractual payment, making qualification easier and giving you a valuable safety net.

Use your prepayment privileges to increase your payments. Once the mortgage is in place, contact your lender and voluntarily increase your monthly payments to match the higher 25-year amount. Most lenders allow this, and it’s a simple phone call.

This approach provides the ultimate combination of discipline and flexibility. You are effectively paying the mortgage on an accelerated 25-year schedule, saving over $100,000 in interest. However, because your contractual payment is the lower 30-year amount, your safety net is always there. If you face a financial challenge, you can immediately revert to your lower required payment with no penalty. It’s a sophisticated way to manage your largest debt.

A Tool for Flexibility, Not a Long-Term Plan

A 30-year amortization is a powerful tool for managing monthly cash flow and can be the key to affording a home or finding financial relief through a refinance. However, it should be viewed as a flexibility tool, not a 30-year sentence of debt. The significant long-term cost in total interest paid and the slower equity growth are serious drawbacks that need to be carefully considered.

By adopting a strategy to accelerate your payments, you can get the benefits without the long-term pain. The key is to have a plan. The team at 360Lending can walk you through these calculations, helping you structure your purchase or refinance mortgage in a way that not only meets your immediate needs but also puts you on the fastest and safest path to being debt-free.

The post 30 Year Amortization: The Good & The Bad first appeared on Irina Marshall | Accessible Mortgages.

Trump’s Latest Tariff Escalation Adds Fresh Uncertainty to Canada’s housing outlook

Eric Majdalani — Wed, 12 Nov 2025 16:35:57 +0000

A deal to end the punishing US-Canada trade war seems further away than ever after Donald Trump said he was ramping up levies on Canadian imports at the weekend, blasting an anti-tariff commercial recently aired in the US by the Ontario government.

Trump’s latest move appears to add a fresh 10% tariff on Canadian imports, although it’s unclear whether that’s a blanket charge or one that only applies to already tariffed goods, while the president has also stepped away from all negotiations with Canada.

The talks breakdown and trade war escalation adda a new layer of uncertainty to the Canadian economic outlook and will offer little comfort to hopeful homebuyers – particularly those working in tariff-impacted industries – waiting for some clarity on the economy before pushing ahead with a purchase.

Few observers expected tariffs to disappear with the stroke of a pen anytime soon. In a keynote address to last week’s Mortgage Professionals Canada (MPC) conference in Ottawa, Canadian Imperial Bank of Commerce (CIBC) deputy chief economist Benjamin Tal indicated that tariffs were here to stay and would remain in place long after Trump has left the White House.

That’s because they’re reaping a huge windfall for the US government, even if it’s coming at American taxpayers’ expense.

But a trade deal, even one that keeps tariffs but at a reduced level, would likely settle at least some nerves about the future of the Canadian economy and give buyers a degree of confidence that another trade war escalation isn’t ahead.

Trade deal talks crucial to a housing market recovery

Earlier this month, the Canadian Real Estate Association (CREA) highlighted a slow but steady improvement in home sales activity across the country since the tariff chaos from earlier this year settled somewhat.

It expects sales to rebound further in 2026, but indicated much depends on how talks develop on the trade front. “It’s important to reiterate that all forecasts are still subject to higher-than-normal levels of uncertainty, though maybe less now than in the first half of 2025,” the association said.

And Canada Mortgage and Housing Corporation (CMHC) has also suggested the outcome of tariff talks remains the single biggest factor impacting how the housing market performs in the months and year ahead.

Trump appeared in conciliatory mood towards Canada in recent weeks before his latest outburst, telling reporters during an Oval Office meeting with prime minister Mark Carney on October 7 that Canada would “walk away very happy” from discussions. “The people of Canada will love us again,” he said.

But the president’s ire at Ontario’s commercial, which featured negative comments made by former president Ronald Reagan about tariffs and aired during Game One of the World Series between the Toronto Blue Jays and Los Angeles Dodgers, seems to have blown out of the water any progress made between negotiators.

What the latest escalation could mean for central bank rate cuts

The new tariffs could put further strain on Canada’s already frayed economy, potentially increasing the chances of more rate cuts by the Bank of Canada in the coming months.

Plenty of housing and mortgage market watchers will be keeping a careful eye on Wednesday’s central bank announcement to see how policymakers are viewing the current inflation outlook.

The Bank is expected by most analysts to cut interest rates by 25 basis points, and CIBC’s Tal said last week it needs to lower rates even further in 2026.

“We need to cut interest rates now,” he said. “They are going to meet [in October]. I believe they will cut… and if they don’t cut, they will cut after that because they have to.”

While Bank policymakers and governor Tiff Macklem have emphasized the upside risks to inflation posed by the trade war, the latest escalation by Trump may not put too much upward pressure on the consumer price index (CPI).

That’s because Canada recently scrapped more counter-tariffs on American goods than it had initially disclosed, removing most retaliatory levies against the US except for existing steel, aluminum, and auto-sector charges.

And Carney doesn’t appear in any mood to reinstate those measures despite Trump’s latest escalation. “Canada stands ready to build on the progress that we had been making in our negotiations or discussions with our American counterparts,” he told reporters in Malaysia over the weekend.

For now, the mortgage and real estate industries can only look on and wait – again – to see if more economic turbulence weighs against sales activity and homebuyer confidence.

The post Trump’s Latest Tariff Escalation Adds Fresh Uncertainty to Canada’s housing outlook first appeared on Irina Marshall | Accessible Mortgages.