Monday Market Minute | Jul 29, 2024

The 2025 mortgage renewal wall — $300B in resets and counting

What Moved

CMHC and major bank disclosures highlighted the approaching mortgage renewal wall: over $300 billion in Canadian residential mortgages originated at sub-2% rates during 2020–2021 were set to renew in 2025–2026 at rates two to three times higher. Even with the BoC's recent cuts, renewal rates near 4.5% would represent a significant payment shock for hundreds of thousands of borrowers.

Why It Matters

The renewal wall was the single largest risk factor in Canadian housing and consumer credit markets. For private credit investors, it created two dynamics: increased demand for alternative mortgage products (MICs, private lenders) from borrowers who could not qualify at major banks, and potential credit deterioration in existing private loan portfolios if borrowers faced cascading payment stress.

Signal to Watch

Bank of Canada consumer credit data and mortgage delinquency rates over the next 12 months would reveal whether the renewal wall produced a manageable adjustment or a broader credit stress event. The pace of rate cuts was now directly tied to borrower survival.

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