What Are Trigger Rates—and Should You Be Worried About Them in 2025?
Image courtesy of True North Mortgages
If you’ve got a variable-rate mortgage or are thinking about getting one, there’s one term that’s quietly making a comeback in mortgage conversations: trigger rate.
With interest rates expected to fluctuate again—and possibly even trend downward before bouncing back—understanding this concept could save you from serious financial stress.
🔍 What Is a Trigger Rate?
A trigger rate is the point at which your monthly mortgage payment is no longer covering the interest you owe on the loan. When that happens, none of your payment goes toward your principal anymore.
This matters most if you’re in a variable-rate mortgage with fixed monthly payments—which many Canadians are.
When the interest rate goes up, your interest cost rises. But if your monthly payment doesn’t change, eventually the bank will say: “You’re not covering the interest anymore—we need to adjust your payment.”
And that’s when things get real.
📉 Let’s Walk Through an Example
Let’s say you bought a condo in 2021 and got a variable mortgage at 1.45% interest. Your monthly payment was $2,000, which comfortably covered interest and reduced your loan balance.
Fast-forward to 2025. Rates have crept back up to 6.00%. Your monthly payment is still $2,000, but now your interest alone is $2,100.
You’ve hit your trigger rate—and your lender will step in.
Now, you’ll either:
Be forced to increase your monthly payment,
Start paying a negative amortization (i.e. your balance grows), or
Be asked to make a lump-sum payment or refinance.
Not ideal, right?
⚠️ Why This Matters Right Now
Even though rates have stabilized a bit after the sharp hikes of 2022–2023, the potential for further volatility means this issue isn’t going away. Many homeowners may not even realize they’re approaching their trigger point until the bank contacts them—and by then, options are limited.
If the market softens again and interest rates stay elevated or even spike temporarily, more Canadians will be affected.
✅ What You Can Do
Review your mortgage terms—know if you’re in a fixed-payment variable mortgage and what your trigger rate is.
Run the numbers—how close are you to the line?
Explore refinancing or early renewal—sometimes it’s better to act before you’re forced to.
Talk to a mortgage professional—not just any advisor, but someone who understands the full picture.
🤝 I’m Here to Help You Navigate This
Trigger rates are just one piece of a complex mortgage puzzle. As a mortgage agent with deep experience in navigating volatile markets, I can help you understand your risks—and your options.
Whether you’re already in a variable-rate mortgage or wondering if it’s the right fit, let’s sit down and build a strategy that keeps you protected and confident about your financial future.
Contact me today to get ahead of the curve—before the curve hits back.
