About 9% of Toronto Borrowers May Not Be Able to Refinance in 2027
The Bank of Canada publishes a Financial Stability Report twice a year. It is where they write
down, in public, the things that could go wrong. Most people never read it, which is a shame,
because this year it contains a number about Toronto specifically that is worth knowing.
About 9 percent of borrowers in the Toronto area are estimated to be unable to
refinance in 2027. Nationally the figure is 4 percent.
What that actually means
Not that 9 percent of Toronto will lose their homes. Being unable to refinance means you cannot
move your mortgage to a new lender on standard terms, usually because the loan is too large against
what the property is now worth, or the income no longer supports the payment under the qualifying
rules.
You are not out on the street. You are stuck with your existing lender, with much less negotiating
power, taking whatever renewal they offer. That is an expensive place to be, and it is avoidable with
enough notice.
The Bank also runs a scenario in which prices fall another 10 percent from here. In that case the
national figure goes to about 7 percent and Toronto to about 12.
Stress tests exist to answer “what if,” not “what will.” The Bank is not predicting a further 10
percent decline. It is checking what happens if there is one. Reading a stress test as a prediction
is the single most common way this document gets misused.
Why Toronto is double the national number
Because of what happened here specifically. Prices have fallen about 5 percent in the past twelve
months and roughly 20 percent from the 2022 peak. A larger price decline mechanically
means more borrowers whose loan is large relative to current value, and Toronto had further to fall
because it had climbed higher.
On top of that, the pandemic era cohort renews into a different world. The Bank estimates those
borrowers face payment increases averaging about 15 percent, and that cohort is about
12 percent of all outstanding mortgages in the country.
The part that should calm you down
I want to give the other side of this properly, because a number like 9 percent invites panic and
the same report argues against panicking.
- Mortgage arrears are only slightly above the 2018 to 2019 average. After the
fastest rate increase in a generation, the actual default rate has barely moved. - Roughly 1.3 percent of mortgage holders are more than 60 days behind on some credit
account, against about 2.5 percent of people without mortgages. Mortgage holders are, as a
group, in better shape than people who do not own. - Another 14 percent of outstanding mortgages are variable payment or shorter term
products unlikely to see a payment change at all. - Household debt to disposable income has risen slightly over the past year but
remains below its 2022 peak.
So the honest summary is not that the sky is falling. It is that a specific, identifiable minority
of Toronto owners have a dated problem coming, and they can see the date.
What to do if you might be in the 9 percent
You are most likely in this group if you bought between roughly 2020 and 2022, put down close to
the minimum, and are renewing in 2027.
A summary of a public Bank of Canada report, not financial advice, and not a prediction about
house prices. I am a real estate agent, not a mortgage broker. If your renewal looks difficult, a
licensed mortgage broker should be your first call and it costs you nothing to make it.
Why I think this one is worth your ten minutes
Most of what a homeowner reads about their own mortgage is written by someone who wants to sell
them a mortgage. This document is written by the central bank for the purpose of being honest about
risk, and it is free.
It is also, unusually, early. A problem with a date on it two years out is not really a problem
yet. It is a deadline, and deadlines are workable.
Where This Comes From
This post summarises the Households chapter of the Bank of Canada Financial Stability Report 2026, which is free on the Bank of Canada website. The refinancing figures are the Bank’s scenario estimates, not forecasts, and the 10 percent price decline case is a stress test rather than an expectation.
Frequently Asked Questions
What does it mean to be unable to refinance?
Is the Bank of Canada predicting a housing crash?
How much are mortgage payments going up at renewal?
Are Canadians falling behind on their mortgages?
How far have Toronto house prices fallen?
Related Reading
- Mortgage Renewals in Canada
- What Actually Causes Mortgage Arrears in Canada
- Your Credit Card Slips Two Years Before Your Mortgage Does
- Your Home Is Not Selling. Now What?
If you renew in 2027 and you are not certain the numbers work, the useful thing I can give you is an honest read on what your place is worth today. That is the number the whole question turns on, and finding it out commits you to nothing.