Variable vs. Fixed Mortgage: Which Is Right for You in 2026?

The choice between a variable and fixed mortgage rate is one of the most consequential decisions in your home purchase — and in mid-2026, it's also one of the most interesting ones to think through.

Fixed rates give you certainty. Your payment doesn't change for the term (typically 5 years), making budgeting straightforward. The downside: you pay a premium for that certainty, and if rates fall significantly, you're stuck unless you break your mortgage (which triggers a penalty, often 3 months' interest or IRD — whichever is greater).

Variable rates track the Bank of Canada's overnight rate via your lender's prime rate. When the BoC cuts, your rate drops automatically if you have a variable-rate mortgage with variable payments. The risk: if rates rise, so does your payment — though rate caps and trigger-rate clauses offer some protection.

In 2026, with the BoC having cut rates from a peak of 5.00% to 2.75% (and markets pricing in at least one more cut), variable rates have become attractive again. A typical 5-year variable is sitting around prime minus 0.90% — currently around 3.85%, versus 5-year fixed rates in the 4.20–4.50% range.

Our general guidance: if you plan to move or refinance within 3 years, a variable rate often wins due to lower breakage penalties. If you need payment certainty (tight budget, family planning), a shorter fixed term (2–3 years) lets you capture today's rates while retaining flexibility to renegotiate sooner. Talk to a mortgage broker — they can model both scenarios against your specific numbers.