A dramatic shift is unfolding in the Canadian mortgage landscape. Recent data reveals a stark contrast between those seeking to buy and those looking to renew, signaling a growing anxiety about the future of interest rates.
Purchase mortgage quotes have plummeted by 16% across the country, a clear indication of cooling demand as potential homebuyers hesitate. Simultaneously, renewal quotes have surged by 17%, reflecting homeowners bracing for potentially higher payments when their current terms expire.
The appetite for investment properties has virtually evaporated, with quotes falling to a mere 2% of the total – a significant drop from the previous year. This suggests investors are pulling back, anticipating a less lucrative market.
Interestingly, interest in variable rate mortgages is on the rise, climbing 13%. This move suggests borrowers are cautiously optimistic that the Bank of Canada’s easing cycle will continue, allowing them to benefit from potential rate decreases.
The preferred mortgage term is also undergoing a transformation. Three-year quotes have experienced a substantial 21% decline, while five-year quotes have jumped 21%. This indicates a strategic pivot, with borrowers weighing short-term flexibility against the security of a longer-term fixed rate.
This data paints a picture of a market in flux, driven by uncertainty and a desire to capitalize on current conditions. Homeowners facing renewal are particularly focused on avoiding being locked into higher rates in 2026.
Traditionally, Canadians have favored the stability of five-year fixed-rate mortgages. The recent surge in interest for variable rates and shorter three-year terms reflects a calculated gamble – a bet that rates will fall before they climb again.
However, the tide may already be turning. Early indicators suggest a reversal of interest in three-year terms, with a renewed preference for the perceived safety of five-year mortgages. This shift hints at a growing expectation that rates will begin to rise again in the near future.
Currently, purchase mortgages represent only 25% of all quotes, down from 41% last year. Conversely, renewals now account for a dominant 64% of the market, up from 47%.
The dramatic decline in investment property interest – from 9% to just 2% – underscores a significant cooling in that sector. Meanwhile, variable rate mortgages have nearly doubled in popularity, rising from 16% to 29% of all quotes.
These numbers reveal a Canadian housing market grappling with uncertainty, where both buyers and homeowners are carefully navigating a complex and evolving financial landscape.
