Fixed vs. Variable Mortgage Canada 2026: Which Rate Strategy Saves You More?
Should I lock in my variable mortgage to fixed (Canada 2026)?
As of November 5, 2026, the 5-year variable street rate is 3.74% and the tracked 5-year fixed is 4.49%, 0.75 points above the variable. The 3-year fixed is 4.59%, 0.85 points above the variable. A 0.25-point prime move changes the variable payment by about $13 a month per $100,000 on a 25-year amortization. Lock in when the budget cannot absorb a rise, or you are near the trigger rate. A variable-to-fixed conversion is usually penalty-free, and the new rate is the lender's posted or offered fixed rate. On October 28, 2026 the Bank of Canada raised the policy rate by 25 basis points to 2.50%, with the Bank Rate at 2.75% and the deposit rate at 2.45%. Big-bank prime is 4.70% effective October 29, 2026 (overnight plus 2.20), unless a fresher bank prime print disagrees. The next scheduled decision is December 9, 2026.
Verified
TL;DR
3-year fixed rates are the most popular term choice in 2026, offering stability now with the option to renew at potentially lower rates within a shorter horizon.
A rise in prime raises a variable payment. The opening answer prices a 0.25-point move per $100,000 from the live variable rate. Know your trigger rate before you stay variable.
Breaking a variable mortgage typically costs ~3 months' interest ($3,000–$5,000 on a $400,000 balance), while fixed-rate IRD penalties can reach $15,000–$30,000 depending on rate movement and remaining term.
Fixed Rate: Your interest rate and monthly payment stay locked for the entire term (e.g., 5 years), regardless of Bank of Canada rate moves — ideal if you value budget certainty.
Variable Rate: Your rate fluctuates with the Prime Rate. Payments may stay the same or adjust depending on your lender's product structure.
Term Strategy: 3-year fixed rates are the most popular choice in 2026, balancing near-term stability with the flexibility to renew at potentially lower rates within a shorter horizon.
Break Penalties: Breaking a variable mortgage typically costs just 3 months' interest (e.g., ~$3,000–$5,000 on a $400,000 balance), while breaking a fixed mortgage can trigger an Interest Rate Differential (IRD) penalty of $10,000–$30,000 or more depending on how far rates have moved.
Expert Research FAQ
How does the stress test differ for fixed vs. variable in 2026?
Why are 3-year fixed rates dominating the 2026 market?
Fixed vs. Variable Comparison Table
What is the 'IRD' penalty risk for 5-year fixed borrowers?
Primary sources
Primary sources cited by the Ratellow Research Team. Editorial standards · Correction policy
Frequently Asked
Recommended Research
Mortgage Portability Canada 2026: Rules, Timing Windows & Strategy Guide
Mortgage portability gives Canadian homeowners a powerful strategic option: transfer your existing mortgage rate, balance, and terms to a new property instead of breaking your mortgage and facing costly penalties. Governed by Federally Regulated Financial Institutions (FRFIs) and the Office of the Superintendent of Financial Institutions (OSFI) under the B-20 guideline, portability rules vary by lender type — with important distinctions for federally regulated banks versus provincially regulated lenders and credit unions. This guide covers eligibility requirements, portability timing windows (typically 30 to 90 days between sales), blended rate scenarios, and the key differences between porting and a straight-switch.
Fixed vs. Variable Mortgage Canada: 25-Year Rate Comparison & 2026 Guide
Should you lock in a fixed rate or ride the variable wave? This in-depth guide compares fixed vs. variable mortgage rates in Canada over 25 years, updated for 2026 market conditions. Explore historical rate trends, the latest Bank of Canada (BoC) prime rate, current stress test rules, CMHC (Canada Mortgage and Housing Corporation) insurance thresholds, and expert tips for first-time buyers — so you can make a confident, informed mortgage decision.
2026 Canadian Mortgage Prepayment Privileges: Rules, Penalties & Strategies
A comprehensive guide to Canadian mortgage prepayment privileges in 2026, covering lump-sum payment options, payment frequency increases, Interest Rate Differential (IRD) penalties, and re-borrowing rules under CMHC, Sagen, and Canada Guaranty insurer guidelines. Learn how to pay down your mortgage faster, avoid costly penalties, and build home equity strategically.