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.