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Canadian mortgage borrowers heading into 2026 are facing a far more stable interest-rate environment than in recent years, but the impact will vary sharply depending on whether they hold fixed- or variable-rate loans, according to new projections from Ratehub.ca.
Approximately 1.15 million Canadians are expected to renew their mortgages in 2026, the Canada Mortgage and Housing Corporation reports, and some borrowers coming off ultra-low pandemic-era fixed rates of two per cent or lower may be hit the hardest.
Here are Ratehub.ca mortgage expert Penelope Graham’s top five mortgage-rate predictions for 2026:
Graham expects 2026 will usher in a long-awaited period of stability for variable-rate mortgages, given that the Bank of Canada has signalled it will hold rates for the foreseeable future.
“In both its October and December rate announcements, the Bank’s Governing Council emphasized they feel the current policy rate is ‘about right’ to support economic conditions, which continue to adapt to the evolving trade landscape,” Graham said.
Strong year-end GDP and labour figures also support the idea that the BoC will unlikely add further stimulus to keep inflation in check — as long as the economy performs as the Bank forecasts.
As a result, variable-rate borrowers are unlikely to see significant changes to their mortgage payments in 2026.
For the first time in three years, variable-rate mortgages have fallen below fixed-rate mortgages, making them more attractive to borrowers, Graham says. Ratehub.ca’s website cites the lowest variable-rate mortgage at 3.45 per cent compared to a current fixed-rate low of 3.94 per cent.
“That’s currently a 49-basis-point difference, and that spread may widen further, especially as there are a number of market factors that could keep bond yields — and fixed mortgage rates — elevated throughout the year,” Graham said.
The online comparison sites’ internal data reveal that, in 2025, inquiries for variable-rate mortgages grew by 25.7 per cent compared to only seven per cent in 2024.
Graham says fixed-rate borrowers renewing in 2026 are likely to see a sharp jump in monthly payments, based on Ratehub.ca mortgage payment calculations.
Using the national average home price of $607,280 in December 2020, she points to a borrower who made a 10 per cent down payment and locked in a five-year fixed rate of 1.39 per cent (the best available at the time) on a 25-year amortization. That borrower would have taken out a mortgage of $563,495, with monthly payments of about $2,224.
At renewal in December 2025, the remaining mortgage balance would be roughly $465,843. Renewing at today’s best five-year fixed rate of 3.94 per cent would push monthly payments to about $2,800. According to Graham, that represents an increase of roughly $576 per month, or about 26 per cent, adding close to $7,000 a year to housing costs.
By contrast, Graham says borrowers who had chosen variable-rate mortgages are likely to face much more modest increases when renewing.
Using the same December 2020 purchase price and down payment, she notes that a borrower who secured a five-year variable rate of 0.99 per cent would have started with monthly payments of about $2,121 on a $563,495 mortgage.
After a series of rate hikes between 2022 and 2023, followed by multiple cuts beginning in mid-2024, that borrower’s effective rate would have risen to about 2.99 per cent by the end of the term in December 2025, with monthly payments increasing to roughly $2,690.
At renewal, with a remaining balance of about $485,535 and today’s best five-year variable renewal rate of 3.45 per cent, monthly payments would rise slightly further to around $2,797.
Graham says that works out to an increase of about $107 per month, or roughly four per cent, equivalent to nearly $1,300 more per year.
Despite 16 months of interest rate cuts, home sales activity and average prices are relatively the same as they were in early 2024, according to the Canadian Real Estate Association.
“While real estate experts initially called for a rate-fuelled recovery, U.S. tariff threats and market upheaval threw many buyers into decision-paralysis,” Graham said. “As a result, inventory has steadily built up in many of Canada’s biggest real estate centres, tilting conditions firmly in favour of buyers.”
With the BoC largely expected to continue holding rates through 2026, it’s unlikely buyers will see rate relief anytime soon – which won’t do much to stoke demand, she adds.
“However, for motivated buyers, ample choice and bottomed-out mortgage sales could provide a great opportunity to get into the market now, which could materialize into a small post-holiday bump in sales.”