Some mortgage holders have begun to pare down their spending amid higher borrowing costs, according to a new report from TD, particularly those who renewed their mortgages more recently. 

“Mortgage holders have started to adjust their spending in the face of higher interest rates,” economist James Orlando wrote in the Thursday report. 

“We find that people who have reset more recently have pulled back their spending to a greater degree than people with earlier resets.”

The report categorized mortgage holders based on the year of their renewal. 

Household debt is the most significant vulnerability within the Canadian economy, the report said, meaning that homeowners will have less disposable income as they renew their mortgages at higher interest rates – which could weigh on consumer spending. 

Orlando found that people who renewed mortgages in 2023 have reduced their spending more those who had renewals in 2022 and 2021.


His research also found that people with mortgage renewals set for 2024 have not yet reduced their spending to the degree that they will likely need to next year – and the economy will feel the effects when they do.

“This will weigh on overall consumer spending within the economy, but we don’t estimate this impact will be enough on its own to send the economy into recession,” the report said.


It was clear that the Bank of Canada’s rising policy rate beginning in 2022 would weigh on Canadian households, according to the report, which noted that mortgage debt makes up 74 per cent of Canada’s total $2.9 trillion in household debt.

“This debt alongside a 300-basis-point increase in mortgage rates has resulted in Canadians allocating 15.4 per cent of their incomes to pay their debts, up from 13.6 per cent in 2020,” the report said.