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.
Summary: RE/MAX Canada Fall 2025 Housing Market Outlook
“54% of Canadians believe this fall is a good time to strike a deal on a home.”
Here’s a summary of the RE/MAX Canada Fall 2025 Housing Market Outlook piece, released Sept 21st:
- Pricing Trends: Residential price trends varied regionally, rising across Atlantic Canada and the Prairies, while declining in major urban centres in Ontario and British Columbia.
- National average home prices are expected to decrease by about 6.5% this fall.
- 68% of Canadians say a five- to 10-per-cent drop in property prices would make a meaningful difference in their ability to enter the market.
- Sales Activity: Home sales declined year-over-year in 62% of markets analyzed between January 1 and July 31, 2025.
- Buyer Optimism:
- 38.2% of housing markets are sitting firmly in buyer’s territory this Fall.
- 7% of Canadians say they intend to buy their first home within the next 12 months.
- 28% of Canadians planning to buy their first home in the next 12 months say they have saved at least 20 per cent for their down payment.
- 64% of Canadians say they’d feel ready if interest rates fell by 0.5 to one per cent.
- Seller Market:
- 26.4% of housing markets are expected to favour sellers this Fall.
- 8% of Canadians say they plan to sell their home in the next year, and among them, confidence is strong.
- 63% of those planning to sell believe they’ll be able to secure their asking price.
- Homeowner Sentiments:
- 92% of Canadian homeowners see their homes as a solid long-term investment.
Click here to read the full report!
Now is the perfect time to buy a home in Alberta as it is a solid BUYERS MARKET!
Mortgage Mark Herman, best first time home buying mortgage broker in Calgary Alberta
Or call me for a chat at your convenience.
Mortgage Mark Herman
Net Migration to Alberta – #’s here.
the CORE reason home prices in Calgary will be going up for the next 4 years, and are 100% supported and will not be coming down is summed up in this article right here.
https://www.cbc.ca/news/canada/calgary/alberta-population-records-2023-to-2024-data-1.7157110
Summary of the Main Reasons Home Prices are Supported:
- BC and Ontario home prices are DOUBLE Calgary home prices
- 4 million New Canadians on the way here in the next 5 years.
- We hatched the largest 20 – 29 year old population Canada has EVER had, and they are moving out of their parent’s basements and buying their own homes.
- Alberta does NOT have PST
- Alberta does not have a 1% “welcome to the neighborhood tax” when buying property.
After researching the above data points we can confidently say all 5 of these stacked factors will cause home prices to increase is all price ranges for the next few years.
Mortgage Mark Herman, licensed as a top Alberta Mortgage Broker for 21 years and 1 year in BC
Canadian Prime Rate is now 5.95% – Mortgage Rate Analysis to End of 2022
Bank of Canada increased benchmark interest rate to 3.75%
Today, the Bank of Canada increased its overnight benchmark interest rate 50 basis point to 3.75% from 3.25% in September. This is the sixth time this year that the Bank has tightened money supply to quell inflation, so far with limited results.
Some economists had assumed the increase this time around would be higher, but the BoC decided differently based on its expert economic analysis. We summarize the Bank’s observations below, including its all-important outlook:
Inflation at home and abroad
- Inflation around the world remains high and broadly based reflecting the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices
- Energy prices particularly have inflated due to Russia’s attack on Ukraine
- The strength of the US dollar is adding to inflationary pressures in many countries
- In Canada, two-thirds of Consumer Price Index (CPI) components increased more than 5% over the past year
- Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched
Economic performance at home and abroad
- Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world
- In Canada, the economy continues to operate in excess demand and labour markets remain tight while Canadian demand for goods and services is “still running ahead of the economy’s ability to supply them,” putting upward pressure on domestic inflation
- Canadian businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services
- Domestic economic growth is “expected to stall” through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy
- The Bank projects GDP growth will slow from 3.25% this year to just under 1% next year and 2% in 2024
- In the United States, labour markets remain “very tight” even as restrictive financial conditions are slowing economic activity
- The Bank projects no growth in the US economy “through most of next year”
- In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages
- China’s economy appears to have picked up after the recent round of pandemic lockdowns, “although ongoing challenges related to its property market will continue to weigh on growth”
- The Bank projects global economic growth will slow from 3% in 2022 to about 1.5% in 2023, and then pick back up to roughly 2.5% in 2024 – a slower pace than was projected in the Bank’s July Monetary Policy Report
Canadian housing market
- The effects of recent policy rate increases by the Bank are becoming evident in interest-sensitive areas of the economy including housing
- Housing activity has “retreated sharply,” and spending by households and businesses is softening
Outlook
The Bank noted that its “preferred measures of core inflation” are not yet showing “meaningful evidence that underlying price pressures are easing.” It did however offer the observation that CPI inflation is projected to move down to about 3% by the end of 2023, and then return to its 2% target by the end of 2024. This presumably would be achieved as “higher interest rates help re-balance demand and supply, price pressures from global supply chain disruptions fade and the past effects of higher commodity prices dissipate.”
As a consequence of elevated inflation and current inflation expectations, as well as ongoing demand pressures in the economy, the Bank’s Governing Council said to expect that “the policy interest rate will need to rise further.”
The level of such future rate increases will be influenced by the Bank’s assessments of “how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding.”
In case there was any doubt, the Bank also reiterated its “resolute commitment” to restore price stability for Canadians and said it will continue to take action as required to achieve its 2% inflation target.
NEXT RATE INCREASE
December 7, 2022 is the BoC’s next scheduled policy interest rate announcement. We will follow the Bank’s commentary and outlook closely and provide an executive summary here the same day.
Bank of Canada holds benchmark interest rate steady & updates 2022 economic outlook
Summary:
- Prime did not change today, Jan 26, and the Bank of Canada (BoC) clearly said they are planning on starting the needed rate increases at the next meeting in 6 weeks, on Wednesday March 2nd.
- The Market has “priced in” between 4 and 6 increases in 2022, each by .25%, and between 2 and 4 increases in 2023, each by .25%
- There may be fewer increases if inflation returns to the target of 2% from today’s 40 year high of about 5%.
- The USA is seeing record 7% inflation and Canada usually gets dragged along with the US numbers so that balances the possibility of fewer increases.
- Mortgage Strategy – secure a fully underwritten, pre-approval, with a 120- day rate hold, from a person, not an online “60-second-mortgage-app” as soon as you think you may be buying in the next 2 years.
- To start a mortgage application with us, click here, and we will call you with in 24-hours to get things going.
DETAILS:
This morning in its first scheduled policy decision of 2022, the Bank of Canada left its target overnight benchmark rate unchanged at what it describes as its “lower bound” of 0.25%. As a result, the Bank Rate stays at 0.5% and the knock-on effect is that borrowing costs for Canadians will remain low for the time being.
The Bank also updated its observations on the state of the economy, both in Canada and globally, leaving a strong impression that rates will rise this year.
More specifically, the Bank said that its Governing Council has decided to end its extraordinary commitment to hold its policy rate at the effective lower bound and that looking ahead, it expects “… interest rates will need to increase, with the timing and pace of those increases guided by the Bank’s commitment to achieving” its 2% inflation target.
These are the other highlights of today’s BoC announcement.
Canadian economy
- The economy entered 2022 with considerable momentum, and a broad set of measures are now indicating that economic slack is absorbed
- With strong employment growth, the labour market has tightened significantly with elevated job vacancies, strong hiring intentions, and a pick up in wage gains
- Elevated housing market activity continues to put upward pressure on house prices
- Omicron is “weighing on activity in the first quarter” and while its economic impact will depend on how quickly this wave passes, the impact is expected to be less severe than previous waves
- Economic growth is then expected to bounce back and remain robust over the Bank’s “projection horizon,” led by consumer spending on services, and supported by strength in exports and business investment
- After GDP growth of 4.5% in 2021, the Bank expects Canada’s economy to grow by 4% in 2022 and about 3.5% in 2023
Canadian inflation
- CPI inflation remains “well above” the Bank’s target range and core measures of inflation have edged up since October
- Persistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to 5% in the first half of 2022
- As supply shortages diminish, inflation is expected to decline “reasonably quickly” to about 3% by the end of 2022 and then “gradually ease” towards the Bank’s target over the projection period
- Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the 2% target
- The Bank will use its monetary policy tools to ensure that higher near-term inflation expectations do not become embedded in ongoing inflation
Global economy
- The recovery is strong but uneven with the US economy “growing robustly” while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector
- Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions
- Oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19
- Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions
- Overall, the Bank projects global GDP growth to moderate from 6.75% in 2021 to about 3.5% in 2022 and 2023
January Monetary Policy Report
The key messages found in the BoC’s Monetary Policy Report published today were consistent with the highlights noted above:
- A wide range of measures and indicators suggest that economic slack is now absorbed and estimates of the output gap are consistent with this evidence
- Public health measures and widespread worker absences related to the Omicron variant are slowing economic activity in the first quarter of 2022, but the economic impact is expected to be less severe than previous waves
- The impacts from global and domestic supply disruptions are currently exerting upward pressure on prices
- Inflationary pressures from strong demand, supply shortages and high energy prices should subside during the year
- Over the medium term, increased productivity is expected to boost supply growth, and demand growth is projected to moderate with inflation expected to decline gradually through 2023 and 2024 to close to 2%
- The Bank views the risks around this inflation outlook as roughly balanced, however, with inflation above the top of the Bank’s inflation-control range and expected to stay there for some time, the upside risks are of greater concern
Looking ahead
The Bank intends to keep its holdings of Government of Canada bonds on its balance sheet roughly constant “at least until” it begins to raise its policy interest rate. At that time, the BoC’s Governing Council will consider exiting what it calls its “reinvestment phase” and reducing the size of its balance sheet. It will do so by allowing the roll-off of maturing Government of Canada bonds.
While the Bank acknowledges that COVID-19 continues to affect economic activity unevenly across sectors, the Governing Council believes that overall slack in the economy is now absorbed, “thus satisfying the condition outlined in the Bank’s forward guidance on its policy interest rate” and setting the stage for increases in 2022.
Mortgage Rate Holds are the theme for buyers in 2022
Mortgage Mark Herman, your friendly Calgary Alberta mortgage broker & New Buyer Specialist.
Post-Covid Home Demand to Continue – Data
What is everyone doing with the money they saved during Covid?
- Eating out, travel, debt reduction and BUYING HOMES!
- Mortgage rates are low and home prices are close to 2005 levels!
Mortgage Mark Herman, Top Calgary Alberta Mortgage Broker
Latest Bank of Canada Survey:
As COVID-19 continues to be pushed down in Canada, consumer spending is expected to go up. The latest survey by the Bank of Canada suggests that will lead to an even greater demand for homes.
The Bank of Canada’s Survey of Consumer Expectations… indicates:
- 40% of respondents managed to save more money than usual during the pandemic.
- They expect to spend about 35% of those savings over the next 2 years on activities that have been restricted during the pandemic, such as dining out.
- Respondents plan to put 10% of their savings toward debt repayment and
- 10% toward a down payment on a home.
14% plan to buy a home soon, much of that was driven by renters, with 20% saying they want to get into the market.
80% of the respondents who have “worked from home” expect to continue with that and there is a consistent with the shift in demand for larger properties, away from city centres.
Alternative Canadian Mortgage Lenders
THE ALTERNATIVE LENDING MARKET IS GROWING!
According to data compiled by CIBC World Markets (based on Statistics Canada figures), the value of loans from alternative lenders has increased by 25% this past year. In comparison, the overall growth in the mortgage market for 2014 was 4%.
As the number of alternative borrowers grows, it’s important to find a top Calgary Alberta mortgage broker that can provide customized solutions and deals with common sense lenders. We specialize in alternative lenders that have financial solutions to meet:
- Clients who don’t fit the traditional ‘A’ lending / or bank guidelines.
- Self-employed or commissioned clients with stated income.
- Salaried clients with a GDS/TDS that doesn’t meet traditional bank requirements.
- Clients with bruised credit due to extenuating circumstances.
- Clients with outstanding Canada Revenue Agency debts.
- New immigrants to Canada.
- Sophisticated residential real estate investors.
- Clients who can demonstrate a reasonable ability to make future mortgage payments.
All of our solutions are customized to fit the specific needs of the borrower—bringing them closer to their financial goals.
Call me, Mark Herman, Top Calgary Alberta mortgage broker, to talk about any of these products for your specific situation.
403-6891-4376
YYZ & YVR homes: more expensive than Rome, closing in on Paris!
This is some interesting data on the housing market in Vancouver and Toronto from one of the banks we deal with.
Mark Herman; Calgary, Alberta mortgage broker
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Canadian home prices really are “world class”, at least in the country’s two hottest markets.
A survey shows the price for prime residential property Toronto and Vancouver has surpassed Rome and is closing in on Paris. Vancouver is at nearly $1,400 a square foot and Toronto is a little above $1,200. (Top spot is London at more than $3,600/sq. ft.)
The survey says growing foreign investment as a key reason for the rising prices because international investors consider Canadian real estate as a safe haven.
That’s backed up by high-profile Canadian economist Sal Gautieri. He also points to domestic factors: population growth in Toronto and Vancouver (and Calgary) has outpaced the national average by about 2 to 1 over the past decade; economic prospects remain good in both cities; and low financing continues to be a key factor in pricey markets.
Downtown living the ‘new normal’
This is more support for central/ down town condos in Calgary supporting their prices as more people move to the core to avoid the commute.
Mark Herman, Calgary Alberta mortgage broker
Downtown living the ‘new normal,’ report says
Employers move to urban cores to attract qualified workers, retail follows.
Homeowners choosing urban living over suburbia is a key trend in Canada’s real estate market and is helping drive both retail and commercial development in city cores, according to a report. …
“Younger workers in particular — though not exclusively — continue to flock to the urban core, preferring to work where they live, rather than take on long commutes,” the report says.
Members of the millennial generation are not the only ones giving up the more generous living space of suburbia for downtown living. Baby boomers with empty nests and the generation following the millennials, which the report calls “Generation Z,” are also joining the trend …
http://www.cbc.ca/news/business/downtown-living-the-new-normal-report-says-1.2815490