The $550 Payment Shock Meets Ontario’s Historic Population Decline | Mortgage Minute – January 16, 2026

If your mortgage renews this year, brace yourself: your payment is about to jump by roughly $550 per month. And for the first time in modern history, that renewal is happening against the backdrop of something unprecedented: Ontario’s population is actually shrinking

The Historic Population Reversal

We are in completely new ground.

For the first time in modern history, Ontario has seen a year-over-year population contraction. National numbers fell by over 76,000 people in the third quarter of 2025, but Ontario felt it the most.

This demographic shift is upending the old assumption that population growth would always fuel housing demand. Housing starts are already down more than 30% in many Ontario municipalities as the market adjusts to this new reality.

What it means: The baseline assumptions that have guided housing policy, construction, and pricing for decades no longer hold. We’re navigating uncharted territory.

The $550 Monthly Squeeze

That demographic shift is colliding head-on with what’s being called the “renewal cliff.”

Approximately 60% of all Canadian mortgages are heading for renewal by the end of 2026. If you’re one of them, particularly if you locked in a five-year fixed mortgage during the pandemic at rates around 1.5% to 1.8%, prepare for what economists are calling “payment shock.”

The math is stark:

• Average mortgage balance: $550,000
• Payment increase: 15% to 20%
• Monthly impact: $550 more
• Annual impact: Over $6,500

That’s $6,500 drained from your household budget every year, money that was previously going toward groceries, savings, or discretionary spending.

The Bank of Canada has made it clear they’re done cutting rates. The policy rate sits at 2.25% and is expected to stay there through 2026, with the next move likely being a hike to 2.75% in 2027.

What it means: If you’ve been waiting for rates to drop further before addressing your renewal, you’re waiting for something that isn’t coming. This is the new normal.

The Spring “Window of Opportunity”

But here’s the silver lining, particularly for buyers: soft demand and rising inventory have created what industry experts are calling a “Goldilocks market.”

The current landscape:

• Inventory levels: 4.5 months of supply nationally (considered healthy and balanced)
• Pricing: Many markets have slipped back to 2021 levels
• Competition: Bidding wars and frantic urgency have disappeared
• Negotiating power: Buyers finally have leverage

Asking rents across Canada fell every single month in 2025, with Toronto seeing a 5.1% decline to $2,498, the lowest level since early 2022. The rent-versus-buy calculation is shifting, especially with stable (if higher) mortgage rates and improved housing choice.

If you’re a first-time buyer who’s been sitting on the sidelines waiting for “the right time,” this spring offers a level of negotiating power and choice we haven’t seen in nearly a decade.

What it means: The era of endless growth and cheap money has paused, but a balanced market has finally arrived. For buyers who can manage current payment levels, opportunity exists.

What You Should Do Now

If your mortgage renews in 2026:

• Don’t wait for your lender’s renewal notice 90 days out
• Review your options now while you still have time and leverage
• Explore refinancing if you’re carrying high-interest debt
• Consider switching lenders if better terms are available elsewhere
• Run the numbers on your new payment and adjust your budget accordingly

If you’re thinking about buying:

• Take advantage of reduced competition and healthy inventory
• Understand that stable rates and balanced markets favor patient, prepared buyers
• Get pre-approved to understand your true purchasing power
• Work with professionals who understand the current market dynamics

If you’re a landlord or investor:

• Factor in the population decline when projecting rental demand
• Understand that condo markets in major centers remain under the most pressure
• Consider that immigration policies and temporary resident caps continue to impact rental markets

The Bottom Line

Three forces are reshaping Ontario’s housing market simultaneously:

1. Historic population decline
2. A massive wave of mortgage renewals with significant payment shock
3. The most balanced buyer’s market in a decade

Each of these would be significant on its own. Together, they represent a fundamental shift in how Ontario’s housing market operates.

The old playbook (buy now before you’re priced out, wait for rates to drop, bank on endless population growth) no longer applies.

The new reality requires a new approach: informed decisions based on current market conditions, realistic budgeting for higher carrying costs, and an understanding that balanced markets create different opportunities than the frenzied growth we’ve experienced.

Whether you’re renewing, buying, or simply trying to understand what these changes mean for your family’s financial future, now is the time to get informed and get strategic.