1. The 2021 Cohort Trap
Here is the thing about 2021 originations: buyers stretched to their absolute maximum borrowing capacity at rates near 1.5%. Those deeply discounted 5-year fixed terms are now reaching maturity.
The Mathematics of the Shock
When a $700,000 mortgage renews from 1.5% to 4.5%, the principal paydown completely collapses, and the monthly carry cost surges by over $1,000 in many median cases.
2. Bank Amortization Extensions
But here is the problem: extending amortizations past 30 years to suppress monthly payments is no longer a viable bailout.
OSFI Mandates
The banking regulator is forcing lenders to aggressively pull these extended amortizations back to their contractual timelines upon renewal.
3. The Negative Equity Crisis
This is where the true risk lies. Since 2022, peak prices in outlying suburbs have bled down by 20%. Many homeowners cannot switch lenders to find a better rate because their house no longer appraises for the mortgage value.