One of the biggest risks the industry has been watching is the so-called “mortgage renewal tsunami”—the idea that a wave of renewals coming due in a higher interest rate environment could lead to mass defaults, payment shock, and a broader financial crisis.
So far, that forecasted collapse hasn’t materialized. As of mid-2025, Canadian homeowners are indeed facing higher renewal costs, but broad default rates haven’t surged as feared. MReport+2Canada Mortgage and Housing Corporation+2
What this means for brokers:
- High-touch renewal advisory is more important than ever. Even without a mass default event, many homeowners are stretching to meet payments—especially in markets like B.C. and Ontario. MReport+1 Brokers who actively guide clients through renewal planning, affordability assessments, and refinance strategy hold a distinct advantage.
- The crisis is less dramatic, but more persistent. Rather than a sudden spike in defaults, the challenge is a long, drawn-out affordability squeeze. Clients may renew at higher payments, reduce discretionary spending, or tap other credit lines—conditions that increase lifetime risk and make proactive planning essential.
- Educational opportunity. Brokers who can explain the renewal “payment shock” risk, stress-test clients’ finances, and model different rate scenarios can build trust and position themselves as trusted advisors—not just transaction facilitators.
Yes, we have definitely seen and heard of stories of people defaulting. Yet, overall the Canadian mortgage market default rate has always been extremely low. Well under 1%. Here’s some stats from CMHC