Fixed vs Variable Mortgages in 2026: Which Is Better Right Now?

Choosing between a fixed or variable mortgage has always been one of the most important decisions for Canadian borrowers. In 2026, with interest rates stabilizing after years of volatility, the choice comes down to risk tolerance, financial flexibility, and market expectations. So, which option is better right now?

The 2026 Mortgage Rate Environment

By 2026, Canada’s mortgage market has shifted into a more balanced phase. Inflation pressures have eased, the Bank of Canada has slowed its policy moves, and lenders are pricing mortgages with a focus on long-term sustainability rather than rapid changes.

This environment creates a genuine debate between fixed and variable mortgages—both now offer clear advantages depending on your goals.

Fixed Mortgages in 2026: Stability and Certainty

A fixed-rate mortgage locks in your interest rate for the full term, typically 2 to 5 years.

Pros of Fixed Mortgages

• Predictable monthly payments

• Protection from unexpected rate increases

• Easier budgeting and long-term planning

Cons of Fixed Mortgages

• Less flexibility if rates decline

• Potentially higher penalties if you break the mortgage early

Fixed mortgages in 2026 appeal to borrowers who value certainty and payment stability, especially first-time buyers or households with tight budgets.

Variable Mortgages in 2026: Flexibility and Potential Savings

Variable mortgages fluctuate with the Bank of Canada’s overnight rate.

Pros of Variable Mortgages

• Lower starting rates in many cases

• Ability to benefit from future rate cuts

• Historically lower penalties for early exit

Cons of Variable Mortgages

• Payments or amortization may change

• Requires comfort with rate fluctuations

With economists expecting modest rate adjustments, variable mortgages in 2026 may appeal to borrowers who can tolerate some risk in exchange for potential savings.

Which Is Better Right Now?

The right choice depends on your situation:

• Choose fixed if:
  You need payment certainty, plan to stay in your home long-term, or are risk-averse.

• Choose variable if:
  You have financial flexibility, expect rates to trend lower, or plan to refinance within a few years.

There is no universal “best” option—only the one that fits your financial strategy.

Tips Before Choosing a Mortgage in 2026

Before deciding:

• Compare total interest costs, not just rates

• Review prepayment and penalty terms

• Stress-test your budget for higher rates

• Speak with a mortgage professional for personalized advice

Final Thoughts

In 2026, the choice between fixed and variable mortgages is more balanced than in previous years. Fixed offers peace of mind, while variable provides flexibility and potential long-term savings. Understanding your goals, risk tolerance, and cash flow will help you decide which is better right now.