Mortgage Minute: Sept 12, 2025
The Canadian mortgage landscape is at a critical juncture. On one hand, a weakening national job market is significantly increasing the probability of a long-awaited interest rate cut from the Bank of Canada. On the other hand, new data reveals the intense financial pressure facing homeowners, especially in high-value markets like the GTA, as a massive wave of mortgage renewals approaches.
This week, we will break down these conflicting signals, what they mean for the Toronto real estate market, and the strategic actions you should be considering.
Weak Job Data Puts a Rate Cut Firmly on the Table
The biggest story of the week is the clear signal of a cooling Canadian economy. The national economy lost another 66,000 jobs in August, compounding the 41,000 jobs lost in July. This has pushed the unemployment rate up to 7.1%¹, a level not seen outside of the pandemic in nearly a decade.
An economic slowdown of this nature is precisely the catalyst the Bank of Canada needs to justify cutting its overnight interest rate. As a result, financial markets and bank economists have shifted their predictions, now placing the odds of a 25-basis point rate cut at the Bank’s next meeting on September 17th at over 80%². The final piece of the puzzle will be the inflation data released the day before, but the momentum is clearly pointing towards monetary easing.
The Reality of Mortgage Renewals: Payment Shock Hits Ontario
While the prospect of a rate cut is welcome news, it will not erase the significant challenge facing many current homeowners. A wave of 1.8 million mortgages is set for renewal across Canada in the next 12 months. The homeowners most at risk are those who secured five-year fixed rates in the low-rate environment of 2020 and 2021. According to Bank of Canada research, this group could face an average mortgage payment increase of around 20%³.
This “payment shock” is not a future problem; its effects are already being felt. A recent report from Equifax Canada highlights that Ontario is a hotspot for rising 90+ day mortgage delinquencies, which climbed to 0.27% in the second quarter⁴. This financial pressure is prompting homeowners to take action, with a separate Equifax survey finding that over half are now actively considering switching lenders at renewal time to find better terms⁵.
Toronto’s Real Estate Market: A Buyer’s Advantage Emerges
Locally, the Toronto real estate market is undergoing a significant shift. According to the CMHC, new condominium construction has plunged by 60%, putting the city on pace for its lowest number of housing starts in 30 years⁶.
This construction slowdown, combined with softer investor demand, is creating two distinct outcomes. In the short term, it is cooling the market, particularly for condos. This is creating challenges for appraisers⁷ but is also giving prospective buyers more choice, more time to think, and more negotiating power than they have had in years. However, in the long term, this lack of new supply threatens to worsen the city’s housing affordability crisis.
What This Means For Your Mortgage Strategy
Navigating this complex environment requires a clear, proactive strategy.
- For Homeowners Nearing Renewal: A potential quarter-point rate cut will offer only minor relief against a significant payment increase. Do not wait for your lender’s renewal letter. The most strategic action is to start reviewing your options early. For a detailed guide on this process, you can download my Refinance Roadmap.
- For Prospective Buyers: The current market conditions present a strategic opportunity. A combination of softening prices and the prospect of falling interest rates creates a favourable window. The key to capitalizing on this is being underwritten upfront, which gives you the confidence to act decisively.
- For Business Owners: A shifting market can present unique opportunities to leverage business income for a purchase or refinance. If you are self-employed, understanding your options is critical. You can learn more in my Business Owners Mortgage Toolkit.
The market is complex, but complexity creates opportunity for those with a clear plan. Whether you are navigating a renewal or considering a purchase, a personalized strategy is your greatest asset. I invite you to schedule a confidential, no-obligation consultation to review your situation and map out a practical path forward.
Sources:
¹ Canadian Mortgage Professional, “Is a big Bank of Canada rate cut on the way?”, September 9, 2025.
² First National Financial LP, “Residential Market Commentary – Odds favour a rate cut,” September 2025.
³ Canadian Mortgage Professional, “Mortgage renewal wave to test Canadian borrowers as rates ease,” September 9, 2025.
⁴ CMT News, “Higher renewal costs test household budgets in Ontario and B.C., says Equifax,” September 10, 2025.
⁵ Canadian Mortgage Professional, “Majority of Canadian homeowners open to switching lenders, refinancing at mortgage renewal time,” September 11, 2025.
⁶ CMT News, “Toronto, Vancouver weigh on housing starts in first half of year: CMHC,” September 9, 2025.
⁷ Canadian Mortgage Professional, “‘I don’t see it getting any better’: Condo crash puts appraisers to the test,” September 9, 2025.