Ottawa's 2021 buyers are renewing into 4% money right now

The busiest year Ottawa has had this decade

Buried in the June OREB report is a column most people skip. Next to this June's numbers, the report shows the same metrics for June 2021. Sales that month: 1,875. This June: 1,518. Year to date in 2021: 10,271 sales. Year to date now: 6,969.

The first half of 2021 moved 47% more homes in Ottawa than the first half of 2026 has.

Almost all of those buyers took a five-year term. Most took fixed. Five-year fixed rates in mid-2021 ran roughly 1.5% to 2.0% depending on the lender and whether the mortgage was insured.

Five years from mid-2021 is now.

What the payment actually does

Take the composite benchmark home. The June report puts it at $632,200 today and shows it up 2.7% over five years, which back-solves to about $615,600 in June 2021.

Say a couple bought that house with 20% down. Mortgage of $492,000, five-year fixed at 1.99%, 25-year amortization. Their payment has been roughly $2,080 a month.

Five years of scheduled payments takes the balance to about $412,000. They renew today into the best available five-year fixed, call it 3.99%, with 20 years of amortization left. New payment: about $2,488.

That's $407 more a month. A 19.5% increase.

Which is almost exactly what the Bank of Canada's own modelling says. Its staff analysis of the renewal stock found five-year fixed holders renewing in 2026 face an average payment increase of about 20%, the largest of any mortgage type this year. Roughly 60% of all outstanding Canadian mortgages renew across 2025 and 2026, and about 60% of those renewers see their payment go up.

The part people get wrong

Here's where the Ottawa version gets specific. That same couple has been told for five years that the house is their savings account. Let's audit that.

They put $123,000 down. They paid down roughly $80,000 of principal over five years. So they have contributed about $203,000 of their own money.

Their equity today is around $220,000. Benchmark value of $632,200 less the $412,000 balance.

The market gave them about $17,000. They gave themselves the rest.

And $17,000 is less than what it costs to sell. Commission and legal on a $632,000 sale runs north of $28,000 in this city. Five years of appreciation does not cover the cost of leaving.

That's the actual position a lot of Ottawa households are in this summer. A payment going up $400 a month, and an exit that costs more than the house earned.

Worse in two segments, better in one

The composite hides the split. Five-year benchmark change by property type, straight from the June HPI table:

Single family, $720,000, up 3.7% over five years. Townhouse, $550,700, down 0.5%. Apartment, $384,500, down 7.2%.

A 2021 condo buyer isn't looking at thin appreciation. They're looking at a benchmark worth less in nominal dollars than what they paid, before a single dollar of transaction cost. Scale the same example down to a $414,000 apartment with 20% down and today's equity comes out roughly $30,000 short of what they've put in.

The flow data lines up. Apartment sales in June were down 45.6% against June 2021, with 5.3 months of inventory and a 97.1% sale-to-list ratio. Townhouse active listings are up 27.6% year over year and up 264% against June 2021.

I'm not going to tell you renewals caused that. OREB data can't show me who's listing because of a payment reset. But the arithmetic and the inventory point the same direction, and I've had four conversations since May that opened with a renewal letter.

The case for not panicking

I'd be shading this if I stopped there, because the reassuring numbers are real too.

The 2021 buyer at 1.99% was stress-tested at 5.25%, the qualifying floor at the time. On that $492,000 mortgage, a 5.25% payment is about $2,932 a month. They're renewing into $2,488. They're moving to a payment $444 below what their lender certified they could carry, on their 2021 income. Most of them earn more now.

They also have an option. Extending amortization back out to 25 years at 3.99% puts the payment at roughly $2,165, which is $84 above what they've been paying. The Bank of Canada estimates about half of borrowers facing increases could erase them this way. It works, and it costs. At a flat 3.99% it adds something like $53,000 of interest over the life of the loan. You're buying cash flow with time.

The Bank's own conclusion, and I think it's the right one, is that this doesn't add up to severe household stress in aggregate. Rates are stable. The policy rate held at 2.25% on July 15 for a sixth consecutive decision, and the next one isn't until September 2.

What I'd actually do

If you're renewing in the next six months, start shopping 120 days out and get a competing quote in hand before you sign what your lender mails you. The gap between a bank's renewal offer and the best available five-year fixed is frequently 30 to 50 basis points, which on a $412,000 balance is real money.

If you're renewing and half thinking about moving anyway, run the sale math before the renewal math. At 98.5% sale-to-list and 22 days on market, correctly priced Ottawa homes still clear. What doesn't clear is a price built on five years of appreciation that never happened.

And if you're buying, the person on the other side of your next offer may be doing this arithmetic at their kitchen table right now. Worth knowing. It's also why the townhouse and condo segments deserve a harder look than they've been getting. See what your money does in Barrhaven or Orleans against Hintonburg before you commit to a property type.

Renewal letter sitting on your counter and you're not sure what it means for your options? Send me the numbers and I'll run them with you, no pitch attached. 613-262-6545 or fil@613realtor.ca.