Many Canadian homeowners who will renew their mortgages this year don’t have to take too big a hit to their wallets.

Rates to renew five-year mortgages aren’t much higher than they were when those mortgages were taken out, according to a National Bank of Canada research. That means “no payment shock” for the 17.4% of mortgages renewing in 2019, said Matthieu Arseneau, National Bank’s deputy chief economist.

Since January, financial conditions have eased to the point where the renewal rate for five-year mortgages is barely above the current 3% “effective” (or average) rate for all mortgages coming due this year, Arseneau said. In that month, Arseneau estimated that there would be a 70- to 90-basis-point payment shock for mortgage renewals.

A decline in government bond yields and lower funding costs for financial institutions have led to a drop in rates to about 3.1% for insured mortgages and 3.2% for uninsured ones. The lower rates, along with a stellar job market, means that “we can expect a rebound in consumption” after a weak reading in the fourth quarter, Arseneau said.

National Bank’s estimates match those from Bank of Canada Governor Stephen Poloz, who said earlier this month that mortgage payments didn’t rise for most borrowers who recently renewed a five-year, fixed-rate mortgage despite rate hikes from the central bank and tougher eligibility criteria for home loans, according to a Bloomberg report.

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