Market Memo: Changes in Rate Risks – September 2026

A change in mortgage preferences has Canada Mortgage and Housing Corporation cautioning about a change in risks for consumers.

Over the past four years there has been a significant move away from the classic, five-year fixed rate mortgage.  It has been a long-time favourite among Canadian home buyers because of its stability and predictability.

That started to change in 2022 when post-pandemic interest rates began rising, as central banks worked to restrain inflation.  It marked the end of an extended run of historically low interest rates dating back to the 2008-2009 financial crisis.  Since then, more Canadians have been opting for variable rate mortgages or fixed rate terms of less than five years.  

In a new report, CMHC says those changes have also changed the interest rate risk faced by Canadian households.  In an economic environment where interest rate are moving, Canadians tend to feel the effects of the changes faster than consumers in other countries.  (In the United States and much of Europe mortgage terms tend to run for 30 years, compared to the five years that is normal here.)  Moving to even shorter terms, accelerates that process.  If rates are falling, it can work in the consumer’s favour.  But if rates are rising it can create added financial pressure.

Another CMHC report shows that people who renewed a mortgage in the previous 18 months faced a $375 increase in their monthly payment.  More than one-third of them said they are now feeling real pressure on their monthly budgets.  Another 25% said they now have regrets about the mortgages they chose.