Variable-Rate Mortgage Legacy Poses Tail Risk to Canada's Housing Market, Desjardins Says

12:15 PM EDT, 10/27/2026 (MT Newswires) -- The surge in variable-rate mortgages in late 2021 and early 2022 will continue to weigh on Canada's housing market through 2027, Desjardins wrote in a Tuesday note. Rising fixed mortgage rates prompted more homebuyers to choose variable-rate loans, which briefly accounted for over half of all new mortgage originations, Desjardins said. Homeowners who made no extra payments or switched to fixed rates face a tougher renewal outlook, with some first-time renewers at risk of seeing mortgage payments surge by about 50% this fall and winter, said the bank. The Bank of Canada's 2026 Financial Stability Report warns that borrowers renewing five-year fixed- and variable-rate mortgages will face significant payment increases through the first half of 2027, added Desjardins. Although many variable-rate, fixed-payment borrowers have made lump-sum payments or switched to fixed rates, those still exposed could face considerable financial pressure, according to Desjardins. Despite its relatively small size, this group poses a downside risk to Canada's housing market and the wider economy.