Renewing Your Mortgage in BC After the October 2026 Rate Hike: What to Do Before You Sign
The Bank of Canada raised rates on October 28 for the first time since 2023, and the Bank's own staff estimate that about 60% of Canadian mortgages renew in 2025 or 2026. If yours is one of them, the renewal letter is a starting offer, not a final answer. Here is what changed, what it does to a typical payment, and the decisions worth making before you sign, especially if a move could be on the horizon.
Quick Answer
Start three to four months before your term ends. A federally regulated lender must send your renewal statement at least 21 days before maturity, and if you do nothing the mortgage may renew automatically at the rate in that letter. You can negotiate with your lender or switch to another one: since November 21, 2024, a straight switch of an uninsured mortgage between federally regulated lenders no longer requires the stress test, as long as the amount and amortization stay the same. Most importantly, pick a term that fits your plans. If you might sell in the next few years, the length of the term you sign now largely decides whether you can leave without a large prepayment penalty.
What changed on October 28
On October 28, 2026, the Bank of Canada raised its target for the overnight rate by 25 basis points to 2.50%. It was the first increase since 2023. The major banks moved their prime rate to 4.70% the next day, which flows straight into variable-rate mortgages and home equity lines of credit.
Fixed rates work differently. They are priced mainly off Government of Canada bond yields, not the overnight rate, and the Bank's own announcement noted that advanced-economy bond yields are higher. After lenders repriced, the lowest advertised 5-year fixed rate was 4.44% and the lowest 5-year variable was 3.69% (Ratehub tables, October 29, 2026). The next scheduled decision is December 9, 2026. I won't guess where rates go from here. The point of this article is to make a good decision whichever way they move.
Who is renewing, and why it stings
In a July 2025 analysis, Bank of Canada staff estimated that about 60% of all outstanding mortgages in Canada would renew in 2025 or 2026, and that about 60% of those borrowers would see a payment increase. For homeowners with a 5-year fixed mortgage renewing in that window, the estimated average increase was roughly 15% to 20%. That analysis came before the October 28 increase.
The reason is simple. Many of the mortgages renewing now were signed in 2020 and 2021, when the Bank of Canada held its policy rate at 0.25% and 5-year fixed rates were far lower than they are today. Here is what that looks like for one illustrative Tri-Cities homeowner.
The example homeowner
These numbers are invented to show the math. They are not anyone's real mortgage and not a lender quote. Payments are calculated the standard Canadian way for fixed rates (interest compounded semi-annually, paid monthly).
| Item | Example |
|---|---|
| Original mortgage (2021) | $750,000 at 2.49% fixed, 25-year amortization |
| Monthly payment for the last 5 years | $3,356 |
| Balance at renewal | About $635,000 |
| Amortization left | 20 years |
Now the same $635,000 over the remaining 20 years at today's rates:
| Scenario | Rate | Monthly payment | Change |
|---|---|---|---|
| Before renewal | 2.49% | $3,356 | |
| Lowest advertised 5-year fixed | 4.44% | $3,983 | +$627 (about 19%) |
| Lowest advertised 5-year variable, if it stayed put | 3.69% | $3,745 | +$389 |
| A renewal letter 0.60 points above the best rate | 5.04% | $4,186 | +$830 |
Two things stand out. First, the jump on a 5-year fixed lands right inside the Bank of Canada's 15% to 20% estimate. Second, the gap between the best available rate and an unnegotiated one is real money: on this balance, 5.04% instead of 4.44% costs about $17,900 more in interest over a 5-year term. That is why the renewal letter deserves a phone call, not a signature.
Your renewal timeline
| When | What happens | What to do |
|---|---|---|
| 4 to 6 months before maturity | Under the Canadian Mortgage Charter, federally regulated lenders such as banks are expected to contact you about renewal options. | Decide whether you might sell, move up or downsize in the next few years. That answer shapes everything else. |
| 3 to 4 months before | The FCAC suggests shopping around a few months before the term ends. | Get quotes from your lender and through a mortgage broker. Ask about rate holds. |
| At least 21 days before | A federally regulated lender must send your renewal statement: balance, rate, payment frequency, term and fees, and whether it will renew automatically. | Compare it against your other offers. Use competing offers to negotiate. |
| Maturity date | If you have taken no action, the term may renew automatically on the letter's terms. | Have your decision signed before this date. |
Your options at renewal
1. Negotiate with your current lender
The FCAC says it plainly: you may qualify for a lower rate than the one in your renewal letter, and you should tell your lender about offers you have received from other institutions or brokers. Staying is the least paperwork. It is not automatically the best price.
2. Switch to a different lender
The big change since the last renewal wave: on November 21, 2024, OSFI stopped requiring federally regulated lenders to apply the minimum qualifying rate (the stress test) when a borrower does a straight switch of an uninsured mortgage to another federally regulated lender, with no increase in the loan amount or the amortization. Under the Canadian Mortgage Charter, insured mortgage holders can also switch lenders at renewal without requalifying at the insured qualifying rate. The new lender still has to approve you on its own criteria.
Switching can carry costs. The FCAC lists set-up fees at the new lender that may include discharge, registration, transfer or assignment fees, a possible appraisal and other administration fees. The FCAC suggests asking whether the new lender will cover some or all of your switching costs.
3. Choose the term around your life, not just the rate
This is the decision most people rush. A 5-year fixed is the default offer, but the right term is the one that ends when you are likely to make your next move. Breaking a closed mortgage before the term ends usually triggers a prepayment penalty: the higher of three months' interest or the interest rate differential, according to the FCAC. I walk through how large that can get, and the alternatives of porting and blend-and-extend, in selling before your mortgage term ends.
So before you pick fixed or variable, ask yourself: is there a realistic chance we sell in the next two or three years? A growing family, a job change, a parent moving in, or a plan to move from a townhome into a detached home can all make a 5-year lock-in expensive to undo.
4. Extend the amortization to lower the payment
Stretching the remaining amortization back out lowers the monthly payment. The FCAC's advice is to think twice, because you pay more interest overall. In the example, going from 20 to 25 years at 4.44% cuts the payment from $3,983 to about $3,493, only $137 more than before renewal. But if the rate stayed the same for the whole mortgage, the extra five years would add roughly $92,000 in total interest. Extending can be a sensible bridge through a tight stretch. Do it knowingly. If you extend or increase the amount while switching lenders, the switch is no longer a straight switch, and you will be qualified again.
5. Pay down before you renew
At the end of the term you can usually make a lump-sum prepayment without a penalty, according to the FCAC. If you have savings earning less than your new mortgage rate, renewal is the cleanest moment to put some of it against the balance. Keep a sensible emergency cushion.
If a move is possible, renewal is your cleanest exit
This is where I come in, and why a REALTOR® is writing about mortgages. Maturity is the one point in a mortgage where you can usually pay it off or move it without a prepayment penalty. For a family thinking about moving up, that makes renewal a natural decision point:
- If you will sell within a year or so, talk to your lender or broker about the term options that would let you leave without a large penalty. An open mortgage carries no prepayment penalty, but usually at a higher rate. Compare the extra interest with the penalty you would avoid.
- If a move is two to three years away, a term that ends around then can let you sell on schedule without breaking a closed mortgage. Compare its rate with the penalty you would avoid.
- If you plan to stay five years or more, the decision is mostly about rate and risk tolerance, and a good broker is especially valuable here. Here is why I almost always recommend one.
- Either way, ask whether the new mortgage is portable and how new money would be priced if you buy a more expensive home. That one question keeps future options open.
To make that call you need one number you probably don't have: what your home would sell for today. Prices across the Tri-Cities have shifted since 2021, and your equity determines what you could buy next, what bridge financing would look like, and whether moving now or after another term makes more sense. My Equity Map gives you that number, a market estimate based on recent comparable sales (not an appraisal), in writing within 24 hours. Bring it to your mortgage broker and the renewal conversation becomes a real plan. If you are weighing staying against going, renovate or move up? and should I sell now or wait? are good next reads.
Before you sign: a checklist
- Mark your maturity date and count back four months. That's when you start.
- Decide your likely time horizon in the home: under a year, two to three years, or five-plus.
- Get at least two competing quotes, ideally one through a mortgage broker, and ask about a rate hold.
- Read the renewal statement line by line: rate, term, payment, fees, and whether it renews automatically.
- Ask about switching costs and whether the new lender covers discharge, appraisal or legal fees.
- Ask about prepayment privileges and portability on any new term.
- Run the payment in the mortgage calculator at each rate you are offered.
- If a move is possible, get your home's current value first and run your net proceeds before you pick a term.
Frequently asked questions
When should I start my mortgage renewal in BC?
Start three to four months before your term ends. The FCAC suggests shopping around a few months ahead, and under the Canadian Mortgage Charter lenders are expected to contact you about renewal options 4 to 6 months in advance. That leaves time to get competing quotes and a rate hold before your renewal statement arrives.
How much notice does my lender have to give me before renewal?
A federally regulated lender, such as a bank, must send your renewal statement at least 21 days before your term ends. It must show the balance, interest rate, payment frequency, term and any fees. Provincially regulated lenders, such as BC credit unions, may follow different rules, so ask yours.
What happens if I ignore my renewal letter?
Your mortgage may renew automatically on the terms in the letter, which may not be the best rate available. If your lender plans to renew automatically, the renewal statement has to say so. In this article's example, a renewal rate 0.60 points above the best advertised rate would cost about $17,900 more in interest over five years.
Do I have to pass the stress test to switch lenders at renewal?
Not for a straight switch. Since November 21, 2024, OSFI no longer requires federally regulated lenders to apply the minimum qualifying rate when an uninsured mortgage is switched to another federally regulated lender with no increase in the amount or amortization. Insured mortgage holders can also switch at renewal without requalifying under the Canadian Mortgage Charter. The new lender still approves you on its own criteria.
How much will my payment go up when I renew?
It depends on your old rate, balance and amortization. Bank of Canada staff estimated in July 2025 that 5-year fixed borrowers renewing in 2025 or 2026 would see increases of roughly 15% to 20% on average. In this article's example, a $635,000 balance moving from 2.49% to 4.44% over 20 years rises from $3,356 to about $3,983 a month, an increase of about 19%.
Should I pick fixed or variable at renewal?
There's no universal answer, and I don't predict rates. Start with how long you expect to stay in the home, then compare the rates and penalty terms you're offered with a mortgage broker. The term length often matters more than the fixed-versus-variable choice if there's any chance you'll sell before it ends.
Should I extend my amortization to lower my renewal payment?
It lowers the payment but raises the total interest. The FCAC advises thinking twice. In the example, stretching from 20 to 25 years at 4.44% cuts the payment to about $3,493 but adds roughly $92,000 in interest if the rate held for the whole mortgage. Extending also means a switch to a new lender is no longer a straight switch, so you would have to qualify again.
Can I sell my home when my mortgage renews without a penalty?
At maturity you can usually pay off or move your mortgage without a prepayment penalty, which is why renewal is a natural decision point for families thinking about moving. Once you sign a new closed term, breaking it early usually costs the higher of three months' interest or the interest rate differential.
I might sell in the next two years. What term should I choose?
Ask your lender or broker for terms that end around when you expect to move, and ask whether the mortgage is portable and how new money would be priced if you buy a more expensive home. An open mortgage has no prepayment penalty but usually a higher rate. Compare that extra interest with the penalty you would avoid.
Can I make a lump-sum payment when I renew?
Usually, yes. According to the FCAC, you can generally make a lump-sum prepayment at the end of your term without a penalty. If you have savings earning less than your new mortgage rate, renewal is the simplest time to reduce the balance. Keep an emergency cushion.
Sources & Methodology
Renewal rules come from the Financial Consumer Agency of Canada and OSFI. Rate context comes from the Bank of Canada, bank prime-rate announcements and Ratehub's published rate tables. All dollar examples are Craig Johnston's own illustrative arithmetic, checked by calculation, and are not lender quotes.
- Financial Consumer Agency of Canada — Renewing your mortgage. canada.ca/en/financial-consumer-agency/services/mortgages/renew-mortgage.html — 21-day renewal statement, automatic renewal, switching costs, negotiating, amortization caution. Checked October 31, 2026.
- OSFI — Backgrounder: Minimum Qualifying Rate (MQR). osfi-bsif.gc.ca/en/news/backgrounder-minimum-qualifying-rate-mqr — uninsured straight switches, effective November 21, 2024. Checked October 31, 2026.
- Financial Consumer Agency of Canada — Canadian Mortgage Charter (briefing for the House Standing Committee on Finance, May 31, 2024). canada.ca — 4 to 6 months' renewal communication; insured switches without requalifying. Checked October 31, 2026.
- Financial Consumer Agency of Canada — Mortgage fees: Prepayment penalties. canada.ca/en/financial-consumer-agency/services/mortgages/reduce-prepayment-penalties.html — penalty methods; prepaying at the end of the term. Checked October 31, 2026.
- Bank of Canada — Staff Analytical Note 2025-21, "How will mortgage payments change at renewal? An updated analysis" (July 2025). bankofcanada.ca/2025/07/staff-analytical-note-2025-21.
- Bank of Canada — Interest rate announcement, October 28, 2026. bankofcanada.ca/2026/10/fad-press-release-2026-10-28 — overnight rate target raised to 2.50%; next decision December 9, 2026.
- Prime rate and advertised mortgage rates. Major-bank prime of 4.70%, effective October 29, 2026; lowest advertised 5-year fixed and variable rates from Ratehub's tables (fixed, variable), October 29, 2026.
- Craig Johnston, REALTOR® (BCFSA Licence #187645). 47+ year Tri-Cities resident, Member of a Top 1% Team at Greater Vancouver REALTORS®, 2023–2025, working with Tri-Cities homeowners deciding whether to renew, sell or move up.
Methodology: payments use semi-annual compounding with monthly payments, the Canadian convention for fixed-rate mortgages. Five-year interest and total-interest figures assume the stated rate holds for the period shown. Last reviewed October 31, 2026. General information only; not mortgage, legal or financial advice.
Signed: Craig Johnston, REALTOR® (BCFSA Licence #187645) · Royal LePage Elite West · Helping Tri-Cities families move up
Renewing in the next year and wondering whether to stay or move?
Send me your address and when your term ends. Within 24 hours I'll send you an Equity Map showing what your home would sell for today, based on recent comparable sales, so you and your mortgage broker can choose a renewal term with real numbers. No pitch, no spam.
Direct: 604-202-6092 · Craig@SoldByCraig.ca
