Rajendra Savaliya

In Canada, most new mortgages were variable-rate or shorter fixed terms, leaving borrowers more exposed when borrowing costs change during renewal cycles.
The housing agency said Canada's mortgage structure passes interest-rate changes to households relatively quickly and directly because many borrowers renew every few years.
Compared with markets where long-term fixed mortgages are common, Canada's system can support banking resilience while leaving households more sensitive to interest-rate swings.
The economist said shorter terms do not automatically signal poor choices; borrowers also weigh inflation expectations, income risk, refinancing opportunities, and household mobility.
As more households choose shorter mortgage terms, the key takeaway is greater sensitivity to future rate changes when renewal time returns for borrowers.

Canada's Shorter Mortgages Raise Rate Exposure

Since 2022, Canadian borrowers have moved away from five-yr fixed mortgages toward one-to-four-yr fixed terms and variable products, increasing household exposure to interest-rate changes.
The housing agency's 2026 consumer survey found recent renewers reported avg. payment increases of $375 mo, and 35% said the change strained budgets.
Another 25% of mortgage consumers said they regretted the mortgage characteristics they chose, showing how a routine financing decision can create lasting strain.
Canada's mortgage system passes policy-rate changes to borrowers faster than long-term fixed markets, helping when rates fall but increasing exposure when they rise.
A 2026 industry report said shorter terms marked a break from Canada's traditional standard, and while renewals eased, many households still faced significant adjustments.