I’ve recently seen clients offered renewal rates a full 1% above market.

That’s not a typo. A full percentage point higher than what they could get by simply shopping around.

This is what I call the Loyalty Tax—and if you have a mortgage renewing in 2026, you need to understand how it works and why this particular renewal wave is different from anything we’ve seen before.

Your Bank Is Using Your Own Data Against You

Here’s what most homeowners don’t realize: your lender knows more about your financial situation than you think.

Many banks now offer soft credit score ratings through their banking apps. They can see your credit position in real time. They know your loan amount relative to your property value. They’ve watched changes to your income and debt levels through your banking activity.

When they send you that renewal offer, they’ve already calculated whether you can leave.

If they believe you can’t or won’t get a competitive offer elsewhere, they price accordingly. According to Ratehub.ca, Canadians who stick with their current lender pay $155 more per month on average—that’s $1,860 annually, or $9,300 over a five-year term just for signing the renewal letter without question.

And here’s the thing: 69% of Canadians stay with their current lender at renewal.

What Makes 2026 Different

This isn’t just another renewal year.

Housing values have dropped roughly 25% from their early-2022 peak in the Greater Toronto Area. Many borrowers who were in variable rate mortgages saw their payments go into negative amortization during the rate spike—meaning they now owe the same amount or more than when they started.

Think about that. Someone who took out a mortgage in 2021 might actually owe more now than when they signed.

The Canadian economy is putting pressure on income and debt levels. Credit scores are taking hits. And according to the Canada Mortgage and Housing Corporation, 1.15 million mortgage holders will renew in 2026—one of the largest renewal waves in Canadian history.

About 60% of outstanding mortgages are set to renew by the end of 2026.

The Amortization Compression Problem

Here’s where it gets brutal.

If your mortgage balance hasn’t moved because of negative amortization, your lender may expect you to keep to your original amortization schedule. That could be five years less than when you took on the mortgage.

Same balance. Shorter timeline. Dramatically higher payments.

The Bank of Canada notes that mortgage holders with five-year fixed rate contracts renewing in 2025 or 2026 could face payment increases of 15% to 20%. For variable-rate mortgages with fixed payments, the median payment could reach $2,190 by the end of 2027—a 54% increase from February 2022 levels.

This isn’t just about higher rates. It’s about compressed timelines forcing you to pay off debt faster when you can least afford it.

The 120-Day Window You’re Not Using

Your current lender has to send you a mortgage renewal statement at least 21 days before your term ends. They’ll usually mail you a renewal offer about 30 days before maturity.

But when you switch lenders, you can get rate holds at 120 days out.

That’s a 90-day gap where you have rate protection your current lender won’t offer.

We’ve seen 0.25% rate swings on the fixed side with every economic update—GDP reports, job numbers, inflation data, tariff negotiations. In late November, five-year Canadian bond yields jumped from 2.70% to just over 3% in less than two weeks.

If your maturity date falls in the wrong window, you could be stuck renewing for multiple years at a much higher rate.

The Three Paths Forward

When I work with clients on their 2026 renewals, we walk through a needs evaluation to determine which path makes sense:

Refinance: If you need to change your amortization or loan amount—maybe to consolidate debt, fund investments, or access equity for a business or property—refinancing lets you restructure completely.

Switch: If your current lender isn’t offering something competitive or doesn’t match your product and term needs, switching to a new lender gets you what you need without changing your mortgage structure.

Renew: If your current lender is offering something competitive that matches your needs, take the easy path and stay.

The key is understanding which path fits your specific situation. Renewal is the perfect opportunity to reassess your mortgage strategy and make sure it aligns with your financial goals—whether that means paying it off faster or slower, or using your equity strategically.

Active Debt Management as Wealth Strategy

I tell my clients that active debt management is the third pillar of building wealth.

Most people think about earning and investing. But they treat their mortgage as a passive obligation—something that just sits there until it’s paid off.

That’s leaving money on the table.

When someone treats their renewal as “sign and return the form,” I usually ask about their plans for the property or any large financial decisions coming in the next couple of years. Most haven’t connected how their mortgage could impact those plans—or how it could be a tool to help fund what’s next.

Your mortgage can become the funding mechanism for your next move. But only if you approach it strategically.

What to Do Right Now

If you have a 2026 renewal coming up, here’s your action plan:

Talk with all the involved parties. Do a real assessment of where you’re at financially and what your goals are in the next few years.

Get an idea of what your renewal will look like based on current market trends. Figure out how that fits into your plan.

Start early. The biggest mental shift you need to make is not taking this lightly. Many people leave it too late and run out of time and options. Getting ahead means you have choices.

And here’s something that can help: I’m hosting a free Mortgage Renewal Masterclass on January 28th at 12:30 PM that will walk you through my full framework to assess your needs and options.

You can push back on your lender’s first offer. Tell them you’ve spoken with a broker, that you’ve been advised of current market rates, and that you’d like them to beat those rates because your preference is to stay.

This works whether you qualify to leave or not. It pushes your current lender to their best offer. And pushing them won’t pull the offer.

But you need to know what you’re looking at to make that conversation work.

The Bottom Line

2026 renewals are happening in a perfect storm: dropped housing values, negative amortization from the rate spike years, compressed amortization schedules, and continued rate volatility.

Your lender is betting you’ll sign and return that form without question.

Don’t prove them right.

Approach your renewal with strategy and insight. Understand your options. Get ahead of the timeline. And recognize that your mortgage isn’t just a monthly payment—it’s a financial tool you can use to build something lasting.

The Loyalty Tax is real. But it’s optional.