New data from December 2025 reveals a dramatic reversal in Canadian mortgage trends, with a sharp decline in interest for investment properties and a significant swing back toward traditional five-year fixed terms. The latest figures from Rates.ca's mortgage quoter, analyzing November activity, show a market in transition as homeowners and buyers adjust their strategies amid evolving economic forecasts.
A Snapshot of Shifting Preferences
The data, released on December 18, 2025, highlights several key movements. Quotes for five-year mortgage term lengths surged by 21 percentage points year-over-year, jumping from 60% to 81% of total quotes. Conversely, interest in three-year term lengths fell by the same substantial margin, dropping from 40% to just 19%.
Perhaps the most striking statistic is the near evaporation of interest in mortgages for investment properties. This category plummeted to a mere 2% of total mortgage quotes, down seven percentage points from 9% during the same period last year. This indicates a major cooling in the speculative real estate market.
Renewals Rise as Purchases Fall
The report further delineates a market where renewals are dominating activity. Renewal quotes as a percentage of total mortgage quotes rose substantially by 17% year-over-year, climbing from 47% to 64%. This shift underscores the reality facing many homeowners whose mortgages are coming up for renewal in a higher-rate environment.
In contrast, purchase mortgage quotes have fallen by 16% year-over-year, declining from 41% to 25% of total activity. This suggests a slowdown in new home buying activity or increased caution among prospective buyers.
Another notable trend is the steady increase in variable rate mortgage quotes, which rose by 13 percentage points from 16% to 29%. This interest likely peaked during the Bank of Canada's recent easing cycle, as borrowers hoped to benefit from potential further rate drops.
Expert Analysis: Anticipating Rate Rises in 2026
Victor Tran, a mortgage and real estate expert at Rates.ca, provided context for these numbers. "These numbers are a snapshot of what homebuyers are thinking about right now," Tran stated. He pointed out that interest in investment properties is at "rock-bottom" and that a growing number of homeowners are anxious about renewing into higher rates.
"Both homeowners up for renewal and those considering purchasing a home are looking at options that make the most of current market conditions," Tran explained. The recent interest in variable rates aligned with the central bank's easing cycle, but he anticipates a change: "We will likely see less interest in variable rates if the Bank of Canada holds the overnight rate steady and fixed rates continue to rise."
Tran interprets the swing from three-year back to five-year terms as a clear signal of market sentiment. "We are already seeing a reversal of interest in three-year term lengths and a return to favouring five-year term lengths, which suggests buyers and those renewing are anticipating rates beginning to rise in 2026," he concluded.
This collective move toward locking in rates for a longer term reflects a broad expectation that the period of declining interest rates may be ending, prompting Canadians to secure their payments before any potential increases.
