For most of the 2010s, variable rate mortgages were the clear winner in Canada — low rates, predictable Bank of Canada communication, and years of declining rates made variable the sophisticated choice. Then 2022 happened. The Bank of Canada hiked rates 10 times in 18 months, and variable rate borrowers saw their payments surge by hundreds or even thousands of dollars monthly.
Where Rates Stand Today
As of 2024, the 5-year fixed rate from major Canadian lenders sits in the 5.0%–5.7% range, while 5-year variable rates are hovering around 6.0%–6.5% (prime minus a discount). This is an unusual inversion — fixed is cheaper than variable — and it reflects the market’s expectation that the Bank of Canada will begin cutting rates.
The Case for Fixed
Certainty. You know exactly what your payment will be for 5 years. For first-time buyers already stretching their budget, the peace of mind is worth the potential cost. Current 5-year fixed rates are very competitive relative to recent history.
The Case for Variable
If the Bank of Canada cuts rates by 1.5–2% over the next 18 months (as many economists forecast), a variable borrower will benefit immediately. A shorter-term fixed (1–2 year) is another popular strategy — lock in now, then renew when rates are lower.