For months, the assumption was that variable rate mortgages were just one or two rate cuts from being cheaper than fixed rate mortgages.
It turns out that a rate cut wasn’t even necessary: The lowest available five-year variable rate is already cheaper than fixed rates as of this month.
What happened? Fixed rate mortgages simply got more expensive.
Unlike variable mortgages, which follow the Bank of Canada’s headline interest rate for their pricing, fixed mortgage rates are largely based on the performance of bond yields.
The Canada five-year bond yield – the most influential bond on mortgage prices – has been hovering at elevated levels around 2.9 and 3 per cent for weeks, and that means fixed rates have slowly been ticking up.
Whether or not you should take a variable mortgage is still a tricky decision to make. It depends on your risk appetite, whether you can handle unexpected rate hikes and your perception of where rates could go.
Markets had originally expected multiple further rate cuts in 2025, but those sentiments have evaporated. LSEG data now show that markets only believe that one rate cut is likely in the next 12 months.
Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday.
