Monday Market Minute | Feb 24, 2025

The mortgage renewal wall arrives — $300B in ultra-low-rate loans reset in 2025

What Moved

CMHC data confirmed what the market had anticipated: an estimated $300 billion in Canadian mortgages originated during the 2020-2021 ultra-low-rate period were scheduled to renew in 2025. Borrowers who locked in at 1.5-2.5% faced resets to 4.0-5.0%, even after BoC cuts. The first wave of renewals was underway, and early data showed increased consumer stress inquiries at major lenders and a notable uptick in alternative lending applications.

Why It Matters

The renewal wall created a dual dynamic for private markets investors. Mortgage Investment Corporations and private mortgage lenders saw surging demand from borrowers who could not qualify at the Big Six banks under tighter stress-test criteria. This was a volume opportunity with attractive risk-adjusted yields. Simultaneously, the household spending drag from higher mortgage payments threatened to slow the consumer economy — affecting retail real estate, services-sector PE holdings, and consumer credit portfolios.

Signal to Watch

StatsCan's household debt service ratio, updated quarterly, would reveal whether the renewal wall was manageable or would trigger broader credit deterioration by mid-year.

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