Canada Mortgage Rate Comparison 2026 - Fixed vs Variable
Compare Canadian mortgage rates for 2026. Fixed vs variable rates, top lender comparison, and tips to get the best mortgage rate in Canada.
Overview
Choosing the right mortgage in Canada is one of the biggest financial decisions you'll make. With the Bank of Canada's rate adjustments throughout 2025-2026, the mortgage landscape has shifted significantly. This guide compares fixed vs variable rates, the top lenders, and helps you find the best mortgage for your situation.
Current Rate Snapshot (February 2026)
| Rate Type | Best Available | Average |
|---|---|---|
| 5-Year Fixed | 4.29% | 4.65% |
| 3-Year Fixed | 4.49% | 4.85% |
| 5-Year Variable | 4.15% | 4.55% |
| 3-Year Variable | 4.25% | 4.60% |
| Bank of Canada Rate | 3.00% | — |
| Prime Rate | 5.20% | — |
Note: Rates shown are for insured mortgages with 20%+ down payment. Actual rates depend on credit score, property type, and amortization period. Rates are approximate and change daily.
Fixed vs Variable Rates
| Factor | Fixed Rate | Variable Rate |
|---|---|---|
| Rate Stability | ✅ Locked for term | ❌ Fluctuates with prime |
| Current Best Rate | 4.29% (5-year) | 4.15% (5-year) |
| Risk Level | Low | Medium-High |
| Penalty (Break Early) | Higher (IRD or 3 months) | Lower (3 months interest) |
| Best When Rates Are | Expected to rise | Expected to fall |
| Peace of Mind | ✅ Excellent | ⚠️ Moderate |
| Historical Savings | — | Saves more ~60% of the time |
| Payment Predictability | ✅ Same every month | ❌ Changes with rate |
How Variable Rates Work
Variable mortgage rates are calculated as: Prime Rate - Discount
For example: Prime (5.20%) - 1.05% discount = 4.15% variable rate
When the Bank of Canada changes its overnight rate, prime rate adjusts, and your variable rate moves accordingly. With a variable rate mortgage, you can choose:
- Variable Rate Mortgage (VRM): Payment stays the same, but the interest/principal split changes
- Adjustable Rate Mortgage (ARM): Payment amount changes with each rate adjustment
Top Lender Comparison
Big 5 Banks
| Bank | 5-Yr Fixed | 5-Yr Variable | 3-Yr Fixed | Features |
|---|---|---|---|---|
| RBC | 4.79% | 4.60% | 5.04% | Largest bank, branch access |
| TD | 4.74% | 4.55% | 4.94% | Strong online tools |
| BMO | 4.69% | 4.50% | 4.89% | Competitive online rates |
| Scotiabank | 4.74% | 4.55% | 4.99% | Scene+ rewards |
| CIBC | 4.69% | 4.50% | 4.89% | Rate guarantee program |
Online Lenders & Brokers
| Lender | 5-Yr Fixed | 5-Yr Variable | 3-Yr Fixed | Features |
|---|---|---|---|---|
| Nesto | 4.29% | 4.15% | 4.49% | Best online rates |
| Ratehub | 4.34% | 4.20% | 4.54% | Rate comparison tool |
| True North | 4.39% | 4.20% | 4.54% | Mortgage broker |
| CanWise | 4.34% | 4.15% | 4.49% | Butler acquisition |
| MCAP | 4.39% | 4.25% | 4.54% | Monoline lender |
Credit Unions
| Credit Union | 5-Yr Fixed | 5-Yr Variable | Features |
|---|---|---|---|
| Meridian | 4.49% | 4.30% | Ontario focused |
| Coast Capital | 4.54% | 4.35% | BC focused |
| Desjardins | 4.44% | 4.25% | Quebec focused |
| Vancity | 4.49% | 4.30% | BC, ethical banking |
Online lenders typically offer rates 0.30-0.50% lower than Big 5 banks because of lower overhead costs.
Monthly Payment Comparison
Based on a $500,000 mortgage with 25-year amortization:
| Rate | Monthly Payment | Total Interest (5yr) | Total Interest (25yr) |
|---|---|---|---|
| 4.15% Variable | $2,659 | $97,820 | $296,040 |
| 4.29% Fixed | $2,704 | $101,200 | $311,400 |
| 4.65% Average | $2,820 | $110,400 | $345,700 |
| 4.79% Big Bank | $2,865 | $114,200 | $358,600 |
| 5.20% (Prime) | $2,997 | $124,800 | $399,400 |
The difference between the best online rate (4.15%) and a typical Big 5 bank rate (4.79%) is approximately $206/month or $12,360 over 5 years.
Amortization Period
| Period | Monthly Payment ($500K @ 4.29%) | Total Interest | Pros | Cons |
|---|---|---|---|---|
| 25 years | $2,704 | $311,400 | Lower monthly cost | More interest paid |
| 20 years | $3,117 | $247,900 | Save ~$63K interest | Higher payments |
| 30 years | $2,467 | $388,200 | Lowest payments | Most interest, only for insured > 20% down |
Since 2024, first-time buyers in Canada can access 30-year amortization on insured mortgages.
Down Payment Requirements
| Property Price | Min Down Payment | CMHC Insurance | Total Upfront |
|---|---|---|---|
| $500,000 | $25,000 (5%) | $19,000 (4.00%) | $44,000 |
| $750,000 | $50,000 | $28,000 (4.00%) | $78,000 |
| $1,000,000 | $75,000 | $36,500 (4.00%)* | $111,500 |
| $1,500,000 | $300,000 (20%) | $0 | $300,000 |
*As of Dec 2024, CMHC insurance is available on homes up to $1.5M (previously $1M cap).
Down Payment Milestones
- 5% minimum: On first $500,000 of purchase price
- 10%: On portion between $500,001 - $1,499,999
- 20%: No CMHC insurance needed, access to 30-year amortization, lower rates
- 35%+: May qualify for further rate discounts at some lenders
Mortgage Features to Compare
| Feature | Important? | What to Look For |
|---|---|---|
| Prepayment Privileges | ✅ Very | 15-20% annual lump sum + payment increase |
| Portability | ✅ Yes | Transfer mortgage to new property |
| Assumability | ⚠️ Sometimes | Buyer can take over your mortgage |
| Penalty Calculation | ✅ Critical | IRD vs 3-months interest |
| Skip-a-Payment | ⚠️ Nice to have | Miss payments when needed |
| Rate Hold | ✅ Yes | 120-day rate guarantee common |
| Refinance Flexibility | ✅ Yes | Blend-and-extend options |
Breaking Your Mortgage: Penalty Comparison
| Scenario | Fixed Rate Penalty (IRD) | Variable Rate Penalty |
|---|---|---|
| $500K, 3 years remaining | $8,000 - $15,000 | ~$4,000 (3 months) |
| $500K, 1 year remaining | $3,000 - $6,000 | ~$4,000 (3 months) |
Variable rate mortgages almost always have lower penalties, making them easier to break if your circumstances change.
Who Should Choose What?
Choose Fixed Rate if:
- You have a tight budget and need payment predictability
- You believe rates will rise from current levels
- You plan to stay in your home for the full term
- You have low risk tolerance and prefer stability
- You're a first-time buyer and want simplicity
Choose Variable Rate if:
- You can handle payment fluctuations
- You believe rates will remain stable or decrease
- You might move/refinance before the term ends (lower penalties)
- You have higher risk tolerance
- Historically, variable saves money ~60% of the time
Use a Mortgage Broker if:
- You want access to multiple lenders simultaneously
- Your situation is complex (self-employed, bad credit)
- You want someone to negotiate on your behalf
- First-time buyer who needs guidance
Tips for Getting the Best Rate
- Compare at least 5 lenders — Never accept the first rate offered
- Check online lenders — They're typically 0.3-0.5% lower than banks
- Improve your credit score — 750+ unlocks the best rates
- Consider a broker — They shop the market for you, at no cost
- Negotiate — Banks will often match or beat competitor quotes
- Lock in early — Get a 120-day rate hold when you start shopping
- Look beyond rate — Prepayment privileges and penalty terms matter too
Verdict
In the current 2026 rate environment, variable rates offer a slight edge (4.15% vs 4.29% fixed), and with the Bank of Canada expected to hold or cut rates further, variable may continue to save money. However, the spread between fixed and variable is narrow enough that the peace of mind of a fixed rate is worth the premium for many borrowers.
Our recommendation: For most Canadians, the 5-year fixed rate from an online lender (4.29%) offers the best balance of savings and stability. If you're comfortable with some risk and want the lowest possible rate, go variable. Always compare at least 5 lenders before committing.