It’s one of the most common questions I get: “Should I go fixed or variable?” And in 2026, with the Bank of Canada holding its rate steady and global uncertainty on the horizon, the answer matters more than ever. Here’s a clear breakdown to help you decide.

Where Rates Stand Right Now (April 2026)

• Bank of Canada overnight rate: 2.25% (held steady since October 2025)
• Prime lending rate: 4.45%
• Typical 5-year fixed rates: approximately 4.34–4.54%
• Typical variable rates: prime minus a discount (varies by lender)

The Bank of Canada has paused its rate-cutting cycle after delivering nine consecutive cuts from 2024 to October 2025. While inflation is near the 2% target, rising global energy prices and trade uncertainty with the United States have introduced new risks that could push rates in either direction.

What Is a Fixed Rate Mortgage?

A fixed rate mortgage locks in your interest rate for the entire term — typically 1 to 5 years, though longer terms exist. Your payment stays the same every month regardless of what happens to interest rates.

Best for:

• Buyers who want payment certainty and predictability
• Those on a tight budget where a rate increase would cause strain
• Anyone who dislikes financial uncertainty
• First-time buyers getting comfortable with homeownership costs

Watch out for:

• Fixed rates are typically slightly higher than variable rates at the time of signing
• Breaking a fixed-rate mortgage early often triggers a significant penalty (the Interest Rate Differential, or IRD), which can run into thousands of dollars

What Is a Variable Rate Mortgage?

A variable rate mortgage fluctuates with your lender’s prime rate, which in turn follows the Bank of Canada’s overnight rate. When the Bank cuts rates, your rate drops. When it raises them, your rate goes up.

Variable rates are typically expressed as “prime minus X%” — for example, prime minus 0.75%, which at today’s prime of 4.45% would give you a rate of 3.70%.

Best for:

• Buyers comfortable with some rate fluctuation
• Those who may need to break their mortgage early (penalties are typically much lower — usually just 3 months’ interest)
• Buyers who believe rates will stay flat or decrease further

Watch out for:

• If rates rise significantly, your payments increase or more of each payment goes toward interest
• Variable rates require a higher tolerance for uncertainty

The 2026 Consideration: What Are Rates Likely to Do?

The Bank of Canada has paused rate cuts as it monitors two competing pressures — a weakening domestic economy (which typically calls for cuts) and rising global energy prices following Middle East tensions (which could push inflation higher and delay further cuts). The next rate announcement is April 29, 2026.

Most major forecasts expect rates to remain broadly stable through much of 2026, with modest cuts possible in late 2026 or 2027 if domestic weakness persists and energy prices stabilize.

What this means for the fixed vs. variable decision:

• If you believe rates stay flat or rise, fixed offers protection
• If you believe cuts resume later in 2026 or 2027, variable allows you to benefit
• If you’re unsure (which is the most honest answer), a shorter fixed term (1–3 years) lets you reassess sooner without locking in long

A Third Option: The Hybrid Mortgage

Some lenders offer split mortgages — part fixed, part variable. This gives you stability on a portion of your mortgage while still benefiting if rates fall on the other portion. Not every lender offers this, but it’s worth exploring.

My Honest Take

There is no universally right answer — and anyone who tells you otherwise isn’t giving you the full picture. The right choice depends on your personal finances, your risk tolerance, your timeline, and what you plan to do with the property.

What I can do is walk you through the numbers for your specific situation — what each option would cost you monthly, what the break-even point looks like, and which path makes the most sense given where rates are headed.

No pressure, no cost. Call or text 437-985-0239 or visit www.lagommortgages.com.

Varun Sharma | Mortgage Agent (L1) | Lagom Mortgages | Silver Leaf Financial Group Inc. (Brokerage Licence #13415) | Originator Licence #M20003632