Variable Rate or Fixed Rate for Renewals in 2026?
Here is what a math-based, mortgage broker with 21 years of experience and an MBA in finance looks at when deciding what to do for my own mortgage renewal.
This is a super common question as there are still 1,800,000 Canadian mortgage renewals to come before summer 2027, with the same 1.8M renewals completed since 2025.
Numbers at the top, words at the bottom.
Numbers
Variable Rate in 2024 = 6.20%
(Prime – .90% = 7.2% – .9% = 6.2% rate.)
-2.75% rate drops = 3.45% today, Jan 2026.
Variable Rate in 2026 = 3.75% today
(Prime – .70% = 4.45% – .7% = 3.75% rate.)
No rate drops expected, 2x .25% increases expected = 3.75% + .5 = 4.25% by the end of 2026.
Continued instability will lead to more rate increases later.
5-year Fixed Rates
5.09% in 2024
4.24% today – 2026
Analysis
Variable wins by .5% today, but fully expect 2 x o.25% increase in 2026 to make the rate the same as fixed rates are today, Jan 2026.
Fixed rates are now, and will continue to slowly rise, as Trump policy is highly inflationary.
If you take a variable now, and then go to lock it in later, when variable rates / prime rates start to increase, the rate you lock in at will be higher than today.
Summary
Rates look to have bottomed out right now, from looking many data points.
Fixed rates are ½% higher than the variable rates today – Jan 2026.
Then what? In 2024 I was able to precisely layout the next 18 months and predicted every rate increase exactly as it played out. Right now it is not possible to guess what will happen next month so Variable has higher risk and will probably pay more later as the rates increase as expected.
200 Word Summary
Canada’s variable-rate mortgage borrowers have enjoyed significant relief since the Bank of Canada (BoC) began cutting interest rates in 2024, but that momentum is expected to slow—and probably reverse – in 2026.
The BoC delivered 2.75% of rate cuts through 2024–2025, bringing the policy rate down to 2.25%. This helped push insured variable mortgage rates below 4%, down from around 7% in mid-2024.
However, the BoC now views inflation risks as too elevated to justify further cuts, and rate relief for variable-rate borrowers is “mostly behind us.”
The bank’s baseline forecast suggests the BoC’s policy rate could rise back toward its long-term neutral level of 2.75%, which would push variable mortgage rates up by roughly 0.5% in 2026, with additional increases probable in 2027.
Meanwhile, fixed mortgage rates have fallen less dramatically because they are tied to longer-term bond yields, which rebounded in late 2025. Borrowers have increasingly favored 3-year fixed and 5-year fixed terms, anticipating improved renewal conditions ahead when they renew later.
Bottom line: 2026 could prove challenging for variable-rate borrowers. The era of large variable-rate relief seems to be ending, and 2026 may test borrowers who relied on those lower rates — especially if the BoC keeps rates steady or reverses course
Looking at all of this, in March, I will be renewing into the 5-year fixed so I can sleep at night.
Mortgage Mark Herman, MBA, Top Calgary mortgage broker for 21 years.
5 Car Loan Strategies That Can Boost Your Mortgage Approval — An MBA-Level Approach
Top 5 Car Loan Strategies We Used for Mortgage Clients in 2025
In today’s mortgage landscape, qualification isn’t just about income and credit—it’s about strategic debt management. With an MBA in Finance and 21 years in the industry, I approach mortgage qualification the same way I would evaluate a business balance sheet: identify inefficiencies, reduce liabilities, and optimize cash flow.
One of the most overlooked opportunities to a mortgage approval is your auto loan.
Car loan rates now at their lowest point in nearly five years—6.25% to 6.99%—the math has never worked better.Mortgage Mark Herman; Best Mortgage Broker for New Home Buyers in Calgary, Alberta.
Most clients are seeing sizeable reductions in their monthly payments, which directly improves affordability ratios and increases borrowing capacity. In other words, small changes on the car side can create big changes on the mortgage side.
Why Auto Loan Optimization Matters
Mortgage lenders don’t qualify you based on total debt—they focus on monthly obligations. So even if your auto loan balance is reasonable, the payment itself may be restricting your mortgage approval.
From a financial efficiency standpoint, this is low-hanging fruit. Reducing or restructuring this one line item can dramatically shift your debt-to-income (DTI) ratio and unlock far greater mortgage purchasing power.
Top 5 Car Loan Strategies We Used for Mortgage Clients in 2025
1. Commercial Auto Loans for the Self-Employed
By shifting the vehicle loan from personal to business liability, we remove the payment entirely from your mortgage ratios. This is financial restructuring 101—use the proper balance sheet for the proper asset.
2. Auto Loan Payment Reductions
With today’s lower rates and extended terms (up to 96 months on newer models), most clients see substantial monthly reductions.
This isn’t about stretching debt—it’s about reallocating cash flow to where it has the highest ROI: qualifying for a home.
3. Cash-Back Refinancing
Lower the payment and pull out equity from your vehicle.
This can fill down payment gaps or pay off high-interest debt—another strategic reshuffling of resources to strengthen your mortgage file.
4. “Free and Clear” Mortgage-First Strategy
Sometimes paying off a car is required to get a mortgage approved.
The sophisticated move? Refinance the vehicle after closing and reimburse yourself. You maintain mortgage eligibility and preserve liquidity—exactly the type of sequencing we analyze in financial planning.
5. Co-Signer Removal
If you’ve co-signed for someone else, you’re carrying a liability without receiving the benefit.
Removing yourself restores borrowing capacity and aligns your financial profile with your actual obligations.
The Bottom Line
Your auto loan isn’t just a monthly payment—it’s a strategic lever in your overall financial picture. By applying an analytical, MBA-driven approach to debt optimization, we can often increase mortgage qualification dramatically without changing income or credit.
If you’re planning to buy a home this year, let’s look at your auto loan the way a CFO looks at a balance sheet:
Find the inefficiencies, optimize the structure, and unlock the capacity you didn’t know you had.