Choosing between a fixed or variable mortgage rate is one of the biggest financial decisions homebuyers face. With interest rates shifting over the past few years, many buyers in 2026 are asking the same question: should you lock in now, or gamble on rates falling later?
The answer depends on market conditions, risk tolerance, and how long you plan to keep the property.
Understanding Fixed Mortgage Rates
A fixed-rate mortgage means your interest rate stays the same for the entire term of the mortgage, typically 3, 4, or 5 years in Canada.
If your mortgage rate is 4.79% today, it will remain 4.79% for the entire term, regardless of what the Bank of Canada does.
Advantages of Fixed Rates
The biggest advantage is predictability. Your monthly payment stays the same, making budgeting easier.
For example:
- $600,000 mortgage
- 25-year amortization
- 4.79% fixed rate
Monthly payment: roughly $3,420
If interest rates increase later to 6% or more, your payment does not change.
Disadvantages of Fixed Rates
The downside is that you cannot benefit if rates fall.
For example, if rates drop from 4.79% to 3.75%, someone on a variable mortgage may see their payments decrease, while fixed-rate borrowers stay locked in.
Understanding Variable Mortgage Rates
A variable-rate mortgage fluctuates with the Bank of Canada prime rate.
When the central bank raises rates, your mortgage interest increases. When rates drop, your mortgage interest decreases.
Example
In 2022–2023, many Canadian homeowners experienced this firsthand.
Prime rate increased from about 2.45% to over 7%, causing variable mortgage payments to rise dramatically.
However, historically, variable rates have often been cheaper over the long term.
Current Mortgage Rate Comparisons (Typical Range)
While rates change daily, typical ranges in 2026 look roughly like this:
| Mortgage Type | Typical Rate Range |
|---|---|
| 5-Year Fixed | 4.5% – 5.2% |
| Variable Rate | Prime – 0.5% to Prime – 1.0% |
If prime is around 6.7%, a variable rate might land around 5.7% – 6.2% depending on the lender.
Historical Performance: Fixed vs Variable
Over the last 25 years, variable mortgages have historically cost 0.5% – 1% less on average than fixed mortgages.
But that does not mean they are always safer.
For example:
2020 buyers
- Variable rate: ~1.45%
- Fixed rate: ~1.89%
Variable borrowers won.
But by 2023–2024, when rates surged above 6%, many variable borrowers faced significantly higher payments.
Which Mortgage Is Better in 2026?
It depends on your financial comfort level.
Fixed Rates May Be Better If
• You want stable monthly payments
• You believe interest rates may rise again
• You prefer financial certainty
Variable Rates May Be Better If
• You expect interest rates to decline
• You can handle payment fluctuations
• You want flexibility
Many experienced investors choose variable rates, but first-time buyers often prefer fixed payments for peace of mind.
Hybrid Strategies
Some buyers split their mortgage into two parts:
• 50% fixed
• 50% variable
This strategy spreads the risk and can balance stability with potential savings.
The Bottom Line
There is no universal answer to whether fixed or variable mortgages are better.
The best choice depends on:
- Your risk tolerance
- Your financial stability
- Interest rate forecasts
- Your long-term plans for the property
Working with a knowledgeable real estate professional can help you understand how mortgage choices affect affordability and purchasing power.
If you're thinking about buying a home or want help understanding the market, reach out to our team by visiting our contact page.