Fixed or Variable? What Canadian Homeowners Need to Know in 2026
If your mortgage is coming up for renewal, you’re not alone — and you’re probably asking the same question as hundreds of thousands of other Canadians: should I lock in with a fixed rate, or go with variable?
It’s a fair question, and there’s no one-size-fits-all answer. But here’s what the current landscape looks like, so you can make a more informed decision.
- ✓ Monthly payment never changes
- ✓ Full protection if rates rise again
- ✓ Easier to budget long-term
- ✓ Peace of mind in uncertain times
- – Currently higher than variable rates
- – You won’t benefit if rates drop further
- – Larger break penalty if you exit early
- ✓ Lower rate available right now
- ✓ You benefit if rates continue to fall
- ✓ Typically lower penalty to break
- ✓ Historically favourable over full cycles
- – Payment can increase if rates rise
- – Harder to budget with certainty
- – Requires comfort with some uncertainty
Where Rates Stand Right Now
After a period of sharp rate hikes, the Bank of Canada has been steadily cutting its policy rate. Variable rates have now dropped below fixed rates for the first time in three years, which has caught the attention of homeowners who had been sitting in fixed-rate mortgages and wondering what comes next.
At the same time, roughly 60% of all Canadian mortgages are expected to renew in 2025 or 2026, many locked in during the ultra-low rate environment of 2020 and 2021. That means a lot of Canadians are facing a meaningful shift in their monthly payments, regardless of which product they choose.
The Case for a Fixed Rate
Fixed rates offer something genuinely valuable: certainty. You know exactly what you’ll pay each month for the full term. If rates start climbing again, you’re protected.
For homeowners who are already stretching their budget, or who simply prefer to plan without surprises, a fixed rate can offer real peace of mind. The trade-off is that fixed rates are typically a little higher right now, meaning you may pay more in the short term in exchange for that stability.
The Case for a Variable Rate
Variable rates have become increasingly attractive. With the Bank of Canada’s rate now significantly lower than its 2023 peak, variable products are actually cheaper than most fixed options for the first time in years.
If you believe rates will hold steady or continue to ease, a variable rate could save you money over your term. Homeowner sentiment has clearly shifted: inquiries for variable-rate mortgages grew by more than 25% in 2025 compared to the year before.
The risk, of course, is that rates can rise. If inflation picks back up or the economy heats up, the Bank of Canada could reverse course, and your payments would move with it.
What to Think About for Your Own Situation
This is where it really pays to step back and look at the full picture, not just the rate sheet.
A few questions worth asking yourself: How comfortable are you with uncertainty in your monthly payments? How much room is in your budget if rates move? And what does the rest of your financial picture look like?
There’s no universally right answer between fixed and variable. What matters most is finding a solution that genuinely fits your situation, not just one that looks good on paper.
Talk to Someone Who Will Be Straight with You
At Spark Mortgage, good advice starts with understanding where you actually are, not just where the market is. If you’re coming up for renewal and want a straightforward conversation about your options, we’re here to help — no pressure, no jargon.
Reach out to us to get started.
