Mortgage Renewals, Rising Debt, and Stricter Lending Rules: How Brokers Can Be Borrowers’ Best Ally in 2025

Jared Stanley February 25, 2025

Mortgage Renewals, Rising Debt, and Stricter Lending Rules: How Brokers Can Be Borrowers’ Best Ally in 2025

With mortgage renewals surging, debt rising, and banks tightening lending rules, borrowers face tough financial choices. Now more than ever, mortgage brokers are essential in guiding clients through refinancing, debt consolidation, and alternative lending.

Why Mortgage Brokers Are More Essential Than Ever

Millions of Canadian homeowners are about to experience a financial wake-up call. Nearly 60% of outstanding mortgages in Canada will renew by 2026 (Bank of Canada), and many borrowers who locked in ultra-low rates in 2020-2021 will now be renewing at rates more than double or even triple their original rates.

For some, this means a manageable increase. But for many, it represents a financial crisis. A mortgage that once cost $2,500 per month could now cost $3,500 or more, stretching household budgets already weighed down by record-high inflation, rising credit card debt, and stagnant wages (Equifax Canada).

To make matters even more complicated, banks are tightening their lending criteria. Recent regulatory changes from the Office of the Superintendent of Financial Institutions (OSFI) mean that many borrowers who technically can afford their payments might not qualify under new mortgage stress tests and loan-to-income (LTI) caps (OSFI).

With these challenges in mind, mortgage brokers are becoming more than just deal-makers—they are financial strategists, problem-solvers, and borrowers’ best hope for navigating an increasingly restrictive mortgage market.

The 2024 Mortgage Landscape: What’s Changing?

Several key shifts are shaping the mortgage industry this year:

1. A Wave of Mortgage Renewals at Much Higher Rates

• Approximately 1.2 million Canadians will need to renew their mortgages in 2025, with the majority encountering higher interest rates than when their terms initially started (CMHC).

• Around 85% of those mortgages  were secured when the Bank of Canada's policy interest rate was at or below 1% during the COVID-19 pandemic (CMHC). 

1. Some homeowners could see their monthly payments jump by 30-50%, making refinancing or restructuring critical (CMHC).

2. Tighter Lending Criteria from Banks and OSFI’s New Mortgage Rules

In March 2024, OSFI announced stricter limits on high loan-to-income (LTI) mortgages, set to take effect in early 2025.

• Banks will now be limited in how many mortgages they can issue to borrowers whose total loan value exceeds 4.5 times their annual income (OSFI).

• OSFI has maintained the strict mortgage stress test, requiring borrowers to qualify at the higher of their contract rate plus 2% or 5.25%.

• Borrowers who once easily qualified for refinancing under previous rules may now find themselves shut out from traditional lenders.

3. Rising Consumer Debt and Increased Demand for Debt Consolidation

• The average non-mortgage debt per Canadian is now over $21,000, including credit cards, car loans, and personal lines of credit (Equifax Canada).

• Credit card interest rates are above 20%, making it increasingly difficult for Canadians to keep up with payments.

• Home equity is becoming a vital tool for borrowers looking to consolidate high-interest debt into a lower-interest mortgage.

The Mortgage Broker’s Role: How to Help Borrowers Navigate Uncertainty

With higher renewal costs, stricter lending rules, and growing debt levels, borrowers are facing more challenges than ever. This is where mortgage brokers step in—not just as deal facilitators, but as financial advisors and problem-solvers.

1. Proactive Outreach: Start Renewal Conversations Early

Many borrowers won’t realize the full impact of their renewal until they receive their lender’s renewal offer—by then, it may be too late to explore all their options. Brokers who reach out proactively can make a huge difference.

• Start conversations 6-12 months before renewal.

• Help clients assess their new payments and whether they need to explore refinancing.

• Compare lender options early to avoid last-minute stress.

2. Educate Borrowers on Refinancing and Debt Consolidation

For many homeowners, renewing at a higher rate isn’t the only financial challenge—they’re also juggling credit card debt, car payments, and rising costs of living.

• Debt consolidation could be a smart move—by rolling high-interest credit card and loan debt into their mortgage, borrowers can lower their overall interest payments.

• Explain the pros and cons of refinancing vs. taking out a second mortgage—some borrowers may benefit from alternative solutions outside of traditional refinancing.

• Review different amortization strategies—extending the amortization period may provide short-term relief, but brokers should ensure borrowers understand the long-term costs.

3. Offer Solutions Beyond the Big Banks

With OSFI’s new loan-to-income caps and stress tests, many borrowers who could previously qualify for refinancing will now be blocked from traditional bank lending.

• Self-employed borrowers, gig workers, and those with variable income may struggle to qualify under new bank rules.

• Brokers who understand alternative lending solutions—including private lenders, B-lenders, and second mortgage providers—can help borrowers who don’t fit the big-bank model.

• The key is education—borrowers need to understand their full range of options, not just assume their bank’s offer is the only one available.

4. Build Long-Term Relationships, Not Just One-Time Deals

The best brokers don’t just secure a mortgage—they build trust and long-term relationships with their clients.

• Even if a client doesn’t need refinancing today, brokers should provide ongoing education so that when they do, they already know who to turn to.

• Host webinars or educational sessions to help borrowers understand the impact of higher rates and the importance of planning ahead.

• Position yourself as a trusted financial resource, not just a mortgage facilitator.

Final Takeaway: Brokers Are Essential in a Changing Lending Market

The next two years will be a defining period for Canadian homeowners—and mortgage brokers will play a critical role in ensuring borrowers find the best possible solutions.

With stricter bank regulations, rising mortgage payments, and increasing debt burdens, borrowers need expert guidance now more than ever.

If you’re a borrower, don’t wait until your renewal date—talk to a broker today. You may find one near you by using Mortgage Professionals Canada’s Find a Mortgage Broker Near You tool.If you’re a broker, now is the time to strengthen your lender partnerships and prepare for the wave of renewals ahead.

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Author Profile

Jared Stanley Senior Director of Originations at Neighbourhood Holdings

Jared Stanley is the Senior Director of Originations at Neighbourhood Holdings. He has been in the industry for nearly 15 years. In 2015, Jared was awarded Underwriter of the Year by the Canadian Association of Accredited Mortgage Professionals. He is also a motorcyclist and dog lover.