Many Canadians hoping to pay down their credit cards when they refinance their mortgage are finding their options are more limited than they thought, says an industry insider.

Declining home values, lower equity and higher consumer debt are limiting how much some homeowners can access through refinancing or whether they can switch lenders at all, said Leah Zlatkin, a mortgage broker and

LowestRates.ca expert. “This is something I’m seeing come up more often in conversations with homeowners as they approach renewal,” said Zlatkin. “Many expect to refinance to deal with debt at that point, only to discover that changes in equity, income, or borrowing limits have already narrowed what’s possible.”

Home prices in Canada, especially in Ontario and British Columbia, have been falling for over three years now, with some markets suffering double-digit declines.

A drop in the value of the home, combined with loan to value limits, can “significantly” reduce how much equity is available through refinancing, even if the homeowner has kept up with mortgage payments, she said.

The rising cost of living has also driven up credit card balances across Canada, with the average rising almost two per cent to $4,652 late last year.

That extra consumer debt that has accumulated after buying a home can reduce borrowing capacity and narrow refinancing options, she said.

Income changes, whether it is through job loss, reduced hours, parental leave or approaching retirement, can also make it harder to qualify for refinancing.

“Renewal is often treated like a reset button, but for many borrowers it reflects decisions made years earlier,” said Zlatkin. “If spending and debt growth outpace home equity, refinancing options can shrink quickly.”

Mortgage pressures continue to build for Canadians, said Morningstar DBRS in a recent report.

The rating agency expects mortgage portfolios for Canadian banks and credit unions to  show further credit deterioration in 2026, but remain “reasonably resilient,” despite the soft

housing market and trade uncertainty. It does, however, flag certain markets that are exposed to Donald Trump’s tariffs, such as Windsor and Kitchener in Ontario, as especially vulnerable and likely to experience pockets of borrower stress.

Mortgage renewals are another challenge. About 1.15 million mortgages are set to renew this year, and about a third will face higher payments, according to the

Bank of Canada.  The average increase will be six per cent, but five-year fixed mortgage borrowers could face as high as 20 per cent.

“Worse yet, around 10 per cent of variable-rate, fixed-payment mortgage (VFM) borrowers are expected to have a payment increase of more than 40 per cent, which will result in a material payment shock,” said Morningstar.

TFSA vs. RRSP: A wealth-building series from the Financial Post

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Canada’s trade with its southern neighbour is shrinking, in imports and exports.

The United States made up its lowest share of Canadian imports on records going back to the late ’90s in the 12 months to November 2025, said Shelly Kaushik, senior economist at BMO Capital Markets.

The decline reflects Canadian counter tariffs, which were short-lived, but also the public response shifting away from U.S. products, she said. Also, goods from other countries that previously entered Canada by the U.S. are now being rerouted to avoid tariffs.

Exports to the United States are down, but goods heading to the U.S. still represent more than 70 per cent of Canadian shipments, most protected from tariffs by the

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Canada-United-States-Mexico-Agreement (CUSMA). Do you judge your financial life by a three-digit number? Many people do, but treating your credit score as a grade can lead to anxiety, frustration and even shame, especially when it feels like a good score is the key to opportunity. Credit scores can influence rental applications, credit card approvals and the interest rates offered for loans and mortgages, but it’s only one small part of your financial picture. Credit counsellor Mary Castillo offers some healthier options to financial health than fixating on your credit score.

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McLister on mortgages

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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