If you locked in a mortgage rate in 2020 or 2021, your renewal is landing in a very different rate environment. Here's the actual difference between renewing and refinancing — and when each one fits.
A mortgage renewal notice can feel like a formality — sign here, keep going. For a specific group of borrowers right now, it's worth a closer look before signing automatically.
According to Bank of Canada data, roughly 60% of outstanding Canadian mortgages are set to renew by the end of 2026, and about 60% of those renewals — roughly 40% of all outstanding mortgages — are expected to face a higher rate than they currently have. The group most affected: borrowers who locked in 5-year fixed rates of 2.0%–2.99% during 2020 or 2021, now renewing at rates several percentage points higher, with typical payment increases in the 15%–20% range. As of March 2026, the Bank of Canada has held its overnight rate at 2.25% for a third consecutive decision, so the rate environment at renewal is relatively stable — but stable at a materially higher level than 2020–2021 borrowers locked in at.
A renewal is signing a new term with your current lender at their offered rate, typically with no new mortgage stress test and minimal paperwork. It's the simplest path, and for many borrowers it's the right one — but lenders count on renewal inertia, and their initial offer isn't necessarily their most competitive one. It's worth a quick call once you've checked what else is available elsewhere.
Refinancing means replacing your existing mortgage with a new one — potentially with a different lender, a different amortization, or a different loan amount. It requires requalifying under the current mortgage stress test, and if you're breaking an existing term early to do it, most lenders charge a prepayment penalty (typically three months' interest or an interest rate differential, whichever is higher). It's a bigger step than a renewal, but it opens options a renewal doesn't — and any decision to refinance early should weigh that penalty against what refinancing actually unlocks.
None of these apply to every borrower — for a straightforward renewal with a competitive rate on offer, refinancing adds a step for no real benefit. Renewal is also a natural point to reconsider fixed vs. variable: with the Bank of Canada holding steady rather than actively cutting, the traditional case for variable is less clear-cut than during an active cutting cycle.
Start shopping your renewal 90 to 120 days before it's due — most lenders allow you to lock in a rate that far ahead, and comparing your current lender's offer against the broader market costs nothing but time. If a better rate exists elsewhere, that's leverage even if you end up staying with your current lender.
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