Many Alberta homeowners renewing their mortgages this year expect higher payments and financial strain as interest rates remain elevated, a new survey suggests.
The Royal LePage survey, conducted by Hill & Knowlton, found 60 per cent of Albertans with a mortgage up for renewal in 2025 expect their monthly payments to increase, with 25 per cent anticipating a significant jump. Among those expecting higher costs, 86 per cent say the increase will strain their household finances. Only Saskatchewan and Manitoba respondents reported a higher level of concern, at 89 per cent.
"Albertans are more exposed to economic swings due to reliance on the oil and gas sector," said Natosha Wareham-Bakker, a sales representative with Royal LePage Benchmark in Calgary. "Higher incomes don’t always mean stability."
Tighter Budgets and Housing Adjustments
To manage the financial impact, 62 per cent of Albertans say they will cut discretionary spending, while 42 per cent will reduce travel. Another 42 per cent expect to cut back on essentials such as groceries and gas.
Some are considering more significant changes. Eleven per cent say they may relocate to a more affordable region, while 10 per cent are looking at downsizing. Alberta homeowners were among the least likely in Canada to say they would stay put despite higher mortgage costs—only 53 per cent ruled out changing their living situation, compared to 78 per cent in Quebec.
Despite concerns, Wareham-Bakker said market activity has picked up as borrowing costs ease. "There’s been a noticeable uptick in market activity in recent months, as both buyers and sellers begin to feel more confident in the trajectory of lending rates."
More Borrowers Consider Variable Rates Amid Economic Uncertainty
While 79 per cent of Albertans with renewing mortgages currently hold fixed-rate loans, more are now considering variable rates. The survey found 27 per cent plan to switch to a variable-rate mortgage, up from 20 per cent who currently have one.
With interest rates on a downward trajectory, more Albertans are considering variable-rate mortgages to take advantage of potential future cuts.
Escalating trade tensions between the U.S. and Canada could also play a role in interest rate movements. New tariffs on steel and aluminum threaten to push up construction costs, while broader economic uncertainty may lead the Bank of Canada to cut rates more aggressively to shield the economy.
"While a trade war with our southern neighbour offers little economic benefit, new homebuyers and those renewing a mortgage this year may find a silver lining: lower borrowing rates," the press release stated.
More Flexibility for Borrowers
Some regulatory changes may help mortgage holders seeking better terms. In late 2024, the federal banking regulator removed the mortgage stress test for uninsured borrowers switching lenders at renewal, provided their loan amount and amortization period remain unchanged. The change allows homeowners to shop around without having to prove they can afford payments at a much higher "stress test" rate.
"Homeowners should explore all options and not just accept their lender’s first renewal offer," Wareham-Bakker said. "With interest rates fluctuating and new lending rules in place, there may be opportunities to secure a better deal."
Broader Economic Uncertainty Could Shape Future Rates
Nearly 1.2 million mortgages are set to renew across Canada this year, most originally signed when interest rates were below one per cent. The survey suggests homeowners nationwide will face higher payments, but Albertans—who report higher financial strain and greater willingness to adjust their housing—may feel the impact more acutely.
At the same time, economic instability from the ongoing U.S.-Canada tariff dispute could influence borrowing conditions. The press release noted that new tariffs are adding inflationary pressure, raising the cost of imported goods, and weakening the Canadian dollar.
"In its first policy rate announcement of 2025, the Bank of Canada signaled a shift, noting it would prioritize economic growth over inflation control in response to rising trade tensions," the release stated. "In the short-term, this could lead to more aggressive cuts to the overnight lending rate if the central bank deems it necessary to shield the Canadian economy from the fallout of an unprecedented trade dispute."
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