At Lendworth, we spend every day watching capital flows, lender behaviour, and borrower risk. Here are five clear predictions mortgage shoppers should understand before making any decisions in 2026.
1️⃣ Mortgage Rates Will Be Driven by Politics — Not Just Economics
In 2026, borrowing costs are less about inflation data and more about geopolitical risk.
Ongoing uncertainty surrounding the Canada–U.S.–Mexico Agreement (CUSMA) means bond yields — and mortgage rates — are effectively hostage to political headlines. Any renewed threat to scrap or weaken the agreement could temporarily push yields lower as markets react to risk.
Most economists expect Bank of Canada to hold rates steady for most of the year, with a possible hike late in Q4. Bond markets are currently split, pricing in roughly a 50/50 chance of tightening by year-end and almost no chance of cuts.
Bottom line: volatility will remain high, even if headline rates don’t move much.
2️⃣ Variable-Rate Mortgages Will Tempt Borrowers — and Trap Some
If trade tensions ease and economic growth rebounds, inflation pressures could reappear. That would push long-term bond yields higher, making fixed rates more expensive relative to floating rates.
Many borrowers will be tempted to jump back into variable-rate mortgages.
That’s risky.
At Lendworth, we believe 2026 is a year for risk management, not rate gambling. For most borrowers, a hybrid strategy — locking in part of the mortgage while keeping flexibility on the remainder — makes far more sense than going fully variable.
3️⃣ The Renewal Wave Will Reshape Lending Behaviour
Nearly one-third of all Canadian mortgages will renew in 2026.
While today’s average mortgage rate is far higher than in 2021, the so-called “renewal shock” is proving more manageable than feared. Why?
Rates cooled from their 2023 peak
Household incomes rose
Borrowers extended amortizations
Many made lump-sum payments
Payment increases are real — roughly $100+ per month per $100,000 borrowed — but most homeowners are adapting.
Delinquencies will rise modestly, but there will be no national default crisis. Canadians prioritize keeping their homes, even if it means tightening spending elsewhere.
4️⃣ Lenders Will Compete Aggressively — Especially at Renewal
Good borrowers will have leverage in 2026.
Banks and non-bank lenders are already fighting harder to retain renewal clients, often matching or beating competitor rates to prevent attrition.
Regulatory pressure is also easing. The federal mortgage stress test has already been removed for straight switches, and there is a growing chance it could be further relaxed under Office of the Superintendent of Financial Institutions.
However, borrowers in markets where home values have dropped sharply — particularly certain condo segments — may find refinancing more difficult due to reduced equity.
5️⃣ Mortgage Affordability Will Improve — Slightly, and Unevenly
Affordability won’t snap back overnight, but conditions are slowly improving due to a combination of factors:
Rates lower than the 2023–2024 peak
Rising rental supply easing rent pressure
Softer home prices compared to 2021–2022
Widespread use of 30-year amortizations
Wage growth averaging 3–4% annually
In weaker markets — especially Toronto’s high-rise condo sector — 2026 could bring capitulation pricing, creating rare opportunities for first-time buyers willing to compromise on space.
Bonus Trend: AI Will Change Mortgage Approvals Forever
Artificial intelligence is moving fast into mortgage underwriting.
In 2026, speed will become a defining competitive advantage. Automated income checks, document verification, and fraud detection will shrink approval timelines dramatically.
Traditional lenders relying on manual adjudication will struggle to keep up, while nimble platforms and private lenders gain ground.
At Lendworth, we see this shift clearly: time to funding is becoming just as important as interest rate.
What This Means for Borrowers in 2026
This is not a “set it and forget it” mortgage year.
Between political risk, renewal pressure, regulatory shifts, and AI-driven lending changes, strategy matters more than ever.
Whether you’re renewing, refinancing, consolidating debt, or stepping outside traditional bank rules, Lendworth helps Canadians structure mortgages that balance cost, flexibility, and certainty — even when the market feels unstable.
📞 Talk to Lendworth today and prepare your mortgage strategy for what 2026 actually holds.
Your equity deserves more™