2026 Renewals: Navigating the Equity Gap

Key Takeaways

• Massive Renewal Volume: With 1.15 million renewals scheduled for 2026, the mortgage market will be highly active, making it essential to secure your professional advice early to stay ahead of the crowd.
• The Equity Factor: Declining home values in major hubs like Toronto and Vancouver mean some homeowners may have less equity than they realize, which can impact their ability to negotiate with new lenders.
• Negotiating Power Shifts: If you are unable to switch lenders due to a high LTV ratio, your current bank may offer less favourable terms. Being proactive is the only way to regain your leverage.
• The 6-Month Rule: Homeowners should begin evaluating their equity and speaking with a mortgage broker at least six months before their renewal date to explore all available financing paths.
• Customized Solutions: Options like adjusting your amortization period can help manage “payment shock” by lowering monthly costs, even if interest rates have risen since your original term began.

For many Canadians, the year 2026 is circled on the calendar. It’s not just another year; it’s a major milestone for an estimated 1.15 million homeowners renewing their mortgages.

However, the landscape for these renewals looks quite different from what it did five years ago. With shifts in real estate values and a changing interest rate environment, many people are finding that the “standard” renewal process requires a bit more strategy than before. At Marathon Mortgage, we believe being informed is the first step toward financial confidence. Here is a look at the dynamics of the 2026 renewal cycle and how you can prepare.

The Reality of Shifting Home Values

The headlines often focus on national averages, but real estate is deeply local. Between late 2021 and mid-2022, the housing market saw significant peaks, particularly in hubs like Toronto and Vancouver. Since then, we’ve seen a cooling trend.

What does this mean for someone who bought at the peak? In some cases, home values have dipped below the original purchase price. For example:

• In Toronto: Average prices saw a decrease of 5.8% by late 2025, with some properties bought at the 2022 peak seeing valuations drop by as much as 25%.
• In Vancouver: Benchmark prices have also reflected depreciation patterns, moving downward by nearly 4% annually.

When a home’s value drops, it impacts your equity — the portion of the home you actually “own” outright. If the value drops significantly, a homeowner could find themselves in a “negative equity” or “underwater” situation, where the mortgage balance is higher than what the home could sell for today.

Why Being “Trapped” is a Risk

One of the most talked-about challenges for 2026 is the risk of being “trapped” with a current lender. Usually, when your mortgage term ends, you have the option to “shop around” for a better rate or different terms with another lender. This competition is what keeps the market healthy.

However, switching lenders usually requires a reassessment of your Loan-to-Value (LTV) ratio.

• If your LTV is higher than 80% because your home’s value has decreased, it can be much harder to move your mortgage to a new institution.
• Lenders prioritize the security of the asset (the house). Even if you have a perfect payment history, a lender may see a “low-equity” mortgage as higher risk.

When a bank knows a borrower cannot easily switch to a competitor, it may offer less aggressive renewal rates. This “lack of competition” can lead to higher monthly payments for the homeowner.

The Broader Economic Ripple Effect

This isn’t just a challenge for individuals; it also has psychological and economic impacts on the country.

• Market Stagnation: Many homeowners are hesitant to sell their homes at a loss. This often leads to lower inventory turnover, meaning homes stay on the market longer and the real estate cycle slows down.
• Household Spending: As mortgage payments take up a larger slice of the household budget, Canadians may have to cut back on other spending, which can cool the broader economy.

A Four-Step Strategy for 2026 Renewals

While these conditions sound complex, they are manageable with the right plan. If you are among the 1.15 million people renewing in 2026, here is how you can take control:

1. Evaluate Your Equity Position early

Don’t wait for the renewal notice to arrive in the mail. Proactively check your current home value and compare it to your remaining mortgage balance. Calculating your LTV ratio now will give you a clear picture of whether you have the flexibility to switch lenders or if you need to look at alternative solutions.

2. Engage a Mortgage Broker Early

We recommend starting the conversation with a mortgage professional at least six months before your renewal date. Because Marathon Mortgage works closely with brokers, they are your primary gateway to our products and expertise. A broker can run different scenarios, look at alternative lenders, and help you find a path forward even if your equity has dipped.

3. Consider Amortization Adjustments

If the new interest rates result in a monthly payment that feels uncomfortably high, talk to your broker about extending your amortization period. While this means you might pay more interest over the long run, it can provide immediate relief by lowering your monthly out-of-pocket costs.

4. Investigate “Insured” Options

If you started your mortgage with less than a 20% down payment (an insured mortgage), you may still have options to move your mortgage, even with a high LTV ratio. Mortgage brokers are experts at navigating these specific rules and can often find competitive terms that aren’t immediately obvious.

Looking Ahead

As we move toward early 2026, it is vital to keep an eye on economic indicators, such as Bank of Canada interest rate movements. These decisions will directly influence the rates available at your renewal.

The 2026 renewal cycle might require more legwork than previous years, but you don’t have to navigate it alone. By forming a team with a trusted mortgage broker, you can demystify the process and find a solution that fits your long-term goals.

Ready to explore your options? Contact your mortgage broker today to discuss how Marathon Mortgage products can support your homeownership journey. Your broker is your best resource for navigating market fluctuations and securing your financial future.