TD Bank recently released a report stating that average mortgage payments in Canada dropped by 1.7% in the last two quarters of 2024. On the surface, that sounds like great news for homeowners, but as Marcus and Justin explain in this episode of Make Money Count, the reality is far more complicated.

A Drop in Mortgage Payments?

TD’s report claims that overall mortgage payments are down. But how is that possible in a high-interest rate environment?
Here’s what’s happening:

• A significant portion of mortgages coming up for renewal were short-term fixed or variable rate mortgages, originally taken out during the rate hike cycle.
• Many Canadians with larger mortgages tend to gravitate toward variable or short-term fixed rates, especially during volatile rate periods.
• As interest rates begin to decrease slightly or flatten, these borrowers are seeing modest payment reductions, but this only affects a specific segment of the market.

Homeowners with smaller, long-term fixed-rate mortgages are less impacted, but those with bigger debt loads are the ones seeing minor relief, for now.

The Real Risk: Delinquencies Are Rising

While the TD report paints a rosy picture, Marcus and Justin dive deeper into what the data doesn’t show:

• Delinquencies across Canada are at a four-year high, with Toronto seeing a 57% increase in mortgage delinquencies since the end of 2022.
• These stats are based only on bank-issued mortgages. Alternative lenders and mortgage investment corporations (like Cannect’s MIC) don’t report delinquencies to Equifax, meaning the actual number is likely much higher.
• Canadian delinquency rates are also calculated at 90 days late, while in the U.S., it’s 60 days, making Canadian stats appear more favorable than they truly are.

The delinquency numbers cited in TD’s report don’t reflect the true level of financial strain many homeowners are facing.

Inflation, Tariffs & Stagflation:

The economic backdrop isn’t helping:

• Ongoing U.S.–Canada trade tensions and rising tariffs (on pharmaceuticals, copper, etc.) are driving uncertainty and inflation.
• Canada’s jobless rate continues to rise, with no signs of improvement on the horizon.
• If inflation remains persistent and growth continues to decline, Canada could face stagflation, a period of high inflation and low growth, which would stall interest rate cuts.

While a 25-basis-point cut may happen on July 30th, it’s unlikely to provide widespread relief.

What Can You Do If Your Mortgage Is Renewing?

If you’re among the 40% of homeowners facing mortgage renewal soon, especially if you secured a low 1.59% rate five years ago, it’s time to prepare. Here are actionable steps you can take:

Extend Your Amortization

Renegotiate your amortization with your lender—even if you’re 20 years into a 25-year mortgage, you can potentially move to a 30-year schedule to reduce your monthly payment. You can always adjust your payments later to pay it off faster.

Access Equity Smartly

Use home equity strategically to offset rising payments. This can be especially helpful in managing cash flow during renewal periods.

Get Your Own Appraisal

Don’t rely on your bank’s appraisal. Order your own to better negotiate loan terms and to protect against equity compression caused by falling property values.

Explore Alternative Lenders

Big banks often prioritize shareholder optics over borrower needs. Alternative mortgage providers like Cannect offer more flexible solutions that can be tailored to your situation.

Be Your Own Advocate

The TD report may claim Canadians are doing fine, but the data it’s based on tells only half the story. Behind the scenes, many households are struggling with rising delinquencies, falling equity, and uncertainty about the economy. Banks won’t always give you the full picture or all your options. That’s why it’s essential to stay informed, explore your refinancing strategies, and seek unbiased advice.

📞 Need help navigating your mortgage renewal?

Talk to Cannect. We’re not here to sell you a product—we’re here to help you make the smartest move possible, with unbiased advice and the lowest rates in Canada