Canada’s Fixed Mortgage Rates Hold Steady While Variable Edges Higher

Canada’s mortgage rate landscape remained largely stable this week, with fixed rates flattening and variable rates nudging slightly upward—an early sign that lenders are repositioning ahead of 2026 renewal pressures. calm conditions overall, but the underlying trends signal a market still adjusting to elevated borrowing costs and shifting lender risk assessments.

This week’s data comes at an important moment: hundreds of thousands of homeowners are entering renewal windows, and the rate decisions made today will influence affordability for the next several years.

Fixed Rates: A Week of Stillness, A Month of Ease

The 3-year fixed conventional mortgage rate remains at 4.67%, unchanged from the previous week. While the weekly stability shows confidence in near-term rate predictability, the longer trend is more revealing—a drop of roughly 35 basis points over the last month.

The 5-year fixed conventional rate followed a similar pattern, holding at 4.69% this week. Unlike the deeper dip in the 3-year term, the 5-year rate eased only slightly over the past month—about 4 basis points—indicating that the long-term rate curve remains relatively anchored.

For many borrowers facing stiff renewal costs, these steady fixed rates offer temporary relief. In a market where affordability has become one of the biggest household concerns, even modest month-over-month improvements matter.

Fixed products continue to attract borrowers who want insulation from payment volatility. With bond yields trending sideways and economic signals mixed, lenders are comfortable maintaining fixed rates in this narrow band.

Variable Rates Tick Up Slightly

While fixed rates held firm, the 5-year variable/adjustable conventional rate rose to 4.27%, an increase of 2 basis points from last week and about 3 basis points from a month ago.

The move is small but symbolically important. It reflects two forces shaping the variable market:

1. Prime rate stability:
   The Canadian prime rate remains unchanged at 4.45%, meaning lenders are not adjusting the central anchor for most variable mortgage products.
2. Risk pricing by lenders:
   As delinquency pressures differ across provinces—rising in Ontario and B.C., stabilizing elsewhere—lenders are fine-tuning variable pricing to account for regional and portfolio-level risk.

Variable-rate borrowers with adjustable payments won’t see dramatic changes this week, but the slight upward bias shows lenders are not yet ready to price in a full downward shift in the rate cycle.

Prime Rate: Steady at 4.45% as Banks Await 2026 Economic Signals

The prime rate in Canada remains at 4.45%, unchanged in recent weeks. With inflation cooling but still above target, the Bank of Canada has signalled patience before making any major rate cuts.

This steady prime rate holds significant implications:

• Borrowers with adjustable-rate mortgages linked directly to prime will continue experiencing stable payments.
• HELOC borrowers, who are highly sensitive to prime rate movements, maintain the same borrowing cost profile as last month.
• Those considering a switch from fixed to variable will see limited short-term benefit, as the fixed–variable spread continues to favour fixed terms.

Until the Bank of Canada provides clearer direction on its 2026 monetary policy strategy, lenders appear comfortable keeping both variable and fixed pricing relatively narrow.

Borrower Behaviour: 3-Year Fixed Gains Popularity

Given the current structure of Canada’s mortgage rate curve—where 3-year fixed is nearly as affordable as the 5-year fixed—many borrowers are shifting toward shorter fixed terms.

Reasons behind this trend:

• Many homeowners believe the rate-cut cycle will begin in late 2026 or early 2027.
• A 3-year term offers flexibility to refinance sooner at potentially lower rates.
• The 35 bps monthly decline makes the 3-year term a compelling pick for those soon renewing from ultra-low 2020–2021 rates.

Mortgage brokers across Toronto, Vancouver, and Calgary report that a growing share of their clients are choosing mid-term fixed products for the first time in years.

Renewal Pressure: The Big Story Behind the Numbers

Behind these weekly updates sits a major structural challenge:
Hundreds of thousands of mortgages are renewing into much higher rates.

• Approximately 750,000 mortgages renew in late 2025.
• More than 1.1 million renew in 2026, according to market estimates.

Even with stable rates, many households are facing payment increases ranging from 20% to 50%, depending on their original term.

This is one of the reasons lenders are cautious. Despite stable national delinquency data, regional pockets of stress—particularly Ontario’s sharp rise—make banks reluctant to loosen pricing too aggressively.

What This Means for Homeowners Right Now

For borrowers currently renewing or planning to buy:

• Fixed rates remain the safer bet: Pricing stability means predictable payments for 3–5 years.
• Variable rates will likely follow the Bank of Canada’s slow pace: With prime unmoved, big changes are unlikely in the short term.
• The 3-year fixed remains the “value term” of the week: Best blend of affordability and flexibility.
• Locking in early may be beneficial: Pre-approval windows protect borrowers from sudden rate increases.

For those renewing from 2020–2021 lows—where rates often sat in the 1.4%–2.0% range—the sticker shock remains real. But stability in fixed rates means the worst-case scenarios from earlier forecasts have softened slightly.

Canada’s mortgage rate environment is steady heading into the final weeks of 2025. Fixed rates are flat but gradually easing month-over-month, variable rates are showing gentle upward pressure, and the prime rate remains unchanged. Borrowers renewing soon will find that even small declines in fixed rates can help offset higher monthly payments.