Quick Answer: Where Canadian Mortgage Rates Are Heading in 2026
- Variable rates are expected to stay broadly stable in 2026 — the Bank of Canada held its policy rate at 2.25% on March 18, 2026.
- Fixed rates may drift modestly higher as 5-year Government of Canada bond yields stay in the 3.0%–3.5% range.
- The era of falling rates that defined late 2024 and 2025 has likely ended.
- A small minority of forecasters (Scotiabank, Desjardins) now flag a possible rate hike in late 2026.
- For most Canadians renewing or shopping in 2026: secure a 120-day rate hold and compare offers across lenders rather than waiting for big drops.
Why So Many Canadians Are Asking This Right Now
If you’re worried about your mortgage in 2026, you have plenty of company. Roughly 1.2 million Canadian mortgages come up for renewal this year, and many were locked in during 2021 at rates below 3%. Renewing today often means a noticeably higher payment — and the obvious question is whether waiting a few months might make it better.
The honest answer is that nobody can promise where rates will land. What we can do is read the signals — what the Bank of Canada is doing, what the bond market is pricing in, what major bank economists are forecasting — and translate those into something you can act on this week.
Pegasus is an independent broker, not a lender, so we shop the offers from 50+ banks, credit unions, and alternative lenders rather than selling one product. Working with an independent broker means the comparison work happens once, on your behalf.
Quick Start: Pick Your Path
Most readers land here with one of three situations in mind. Pick the one that fits and skim the actions for your path — the rest of the article fills in the why.
- Start 120 days early
- Request a rate hold
- Don’t auto-sign your bank’s letter
- Get a pre-approval first
- Understand the OSFI stress test
- Compare fixed vs variable carefully
- Run your prepayment penalty first
- Check break-even on a new term
- Factor closing costs into the math
- Read on from the top
- Sections move from “what” to “what now”
- Comes back to a clear next step
Where variable rates are heading: the Bank of Canada view
The chain that drives a variable-rate mortgage is short. The Bank of Canada (BoC) sets the policy rate, and banks set their prime rate (the base rate they use to price variable products) at roughly 2.20% above it. Your variable mortgage is then quoted as “prime minus a discount” — for example, prime minus 0.50%.
When the BoC holds, prime stays steady, and your variable rate stays steady. The BoC cut by 100 basis points (1.00%) over 2025, brought the policy rate from 3.25% to 2.25%, and then paused. The 2.25% level sits at the lower edge of what the BoC calls its neutral range — the 2.25%–3.25% band where monetary policy is neither stimulating nor restraining the economy.
Most Big 6 economists (RBC, TD, BMO, CIBC, National Bank) forecast the policy rate ends 2026 right where it started. Scotiabank and Desjardins are the exceptions: both have flagged the possibility of small hikes in the second half of 2026 if inflation pressures persist. See our mortgage glossary for the terms used here.
Where fixed rates are heading: what bond yields are telling us
This is the part that confuses many borrowers: the BoC is holding, so why are fixed-rate offers from your bank creeping up?
Fixed rates follow the bond market, not the BoC. When investors buy a 5-year Government of Canada bond, the yield they accept depends on what they expect for inflation, growth, and interest rates over the next five years. If they think inflation will stay sticky or that the BoC’s next move could be a hike, they demand a higher yield. Lenders take that yield as their cost of funds and add a margin (usually 1% to 2%) to arrive at the 5-year fixed rate they show you.
Two factors have pushed bond yields modestly higher into 2026: ongoing trade and tariff uncertainty, and an oil-price shock earlier in the year that revived inflation concerns. Most Big 6 forecasts now expect the 5-year Government of Canada yield to sit between 3.0% and 3.5% for the rest of the year, with a slight upward bias. The 5-year fixed offers you see on a comparison page like our rate details page may drift higher with them.
Fixed vs Variable in 2026: A Side-by-Side Comparison
| Factor | 5-Year Fixed | 5-Year Variable |
|---|---|---|
| Rate driver | 5-Yr Government of Canada bond yield + lender spread | Bank prime rate (tied to BoC) minus a discount |
| 2026 outlook | May drift modestly higher with bond yields | Likely stable; small hike risk in late 2026 |
| Payment predictability | Same payment every month for the term | Payment may change if prime moves |
| Break penalty | Greater of 3 months’ interest or IRD; can be large at major banks | Typically 3 months’ interest only |
| Best for | Borrowers who value certainty and plan to hold the term | Borrowers who can absorb payment swings |
What the table can’t capture is psychology. A variable that saves $50 a month on paper is still the wrong product if the BoC raises rates twice and you spend the next year refreshing the news feed. Honest self-assessment matters more than the spread between today’s rates.
Run your numbers both ways with our mortgage payment calculator before you commit, and ideally have a broker stress-test the variable scenario against a 0.50%–0.75% increase.
Your 2026 Renewal Roadmap: Step by Step
If you have a mortgage renewing in 2026, the next four months matter more than the next four years of rate forecasts. Here’s the sequence.
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1
Start at 120 days out Most lenders allow a rate hold to be opened up to 120 days before your renewal date. Mark your renewal date, count back four months, and treat that day as your starting line.
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2
Request a rate hold A rate hold locks in a quoted rate for up to 120 days while you decide. If rates rise, you keep the locked rate. If they fall, you can typically request the new lower rate. It’s free and one-sided in your favour. Get a free instant pre-approval certificate to lock a rate while you compare.
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3
Calculate your renewal-shock scenario Take your current balance and amortization, plug in the rate you’re being offered today, and see what the new payment looks like. Canadian mortgages use semi-annual compounding under the federal Interest Act, so use a Canadian-specific tool.
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4
Shop across lenders, not just your bank Your bank’s renewal letter is rarely their best offer. Since November 21, 2024, OSFI has removed the stress test for uninsured straight switches at renewal — meaning if you keep the same balance and amortization, you can switch to another federally regulated lender without re-qualifying. In Quebec, mortgage transactions typically require a notary, which can extend timelines compared to other provinces.
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5
Decide on term length deliberately The default 5-year term may not be the right call in 2026. If you believe rates will be lower in two or three years, a shorter fixed term lets you re-shop sooner. Don’t pick a term out of habit. Ask your broker to quote 2-, 3-, and 5-year fixed alongside variable.
Common Mistakes Canadians Are Making in 2026
The mistakes below come up most often in conversations with renewing homeowners this year. Each can cost real money over the life of the next term.
- Signing the bank’s renewal letter without shopping. Bank renewal letters are typically posted-rate quotes, not best-rate quotes. Comparing before you sign is the highest-paying half-hour you’ll find this year.
- Waiting for big rate cuts that may not come. The BoC has paused, the bond market is pricing in stability or modest hikes, and “holding out” can mean missing a good rate hold today for a worse offer in three months.
- Ignoring the OSFI stress test impact. If you’re refinancing or buying — not just doing a straight switch — you still need to qualify at your contract rate plus 2%, or 5.25%, whichever is higher.
- Choosing the lowest rate without checking the prepayment penalty. A 0.10% lower fixed rate can come with a much larger Interest Rate Differential penalty. Use our prepayment penalty calculator to see the worst-case cost.
- Defaulting to a 5-year term out of habit. Five years is the most-sold product, not always the right one. Shorter terms or hybrids deserve a serious look.
- Forgetting to factor renewal payment shock into the household budget. If your payment is going up by $300–$700 a month, plan for it now — not in a panic two months in.
When Your File Is More Complex
Not every Canadian fits the standard mortgage box. If you’re self-employed, recovering from credit issues, or building an investment portfolio, the rate-direction question matters less than the lender-access question. The major banks may decline files that an alternative lender will approve at a slightly higher rate — and that gap is often the difference between getting a mortgage this year and not.
This is where an independent broker earns the relationship. Razi Khan, Founder and Mortgage Broker at Pegasus, has built the brokerage’s lender network specifically to handle these complex files — including stated-income approvals for self-employed borrowers and second mortgages for credit recovery. The same rate-environment thinking applies, but the lender mix changes.
Frequently Asked Questions About Canadian Mortgage Rates in 2026
Are mortgage rates going up or down in Canada in 2026?
What is the Bank of Canada interest rate right now?
Should I lock in a 5-year fixed mortgage rate or go variable in 2026?
How much will my mortgage payment go up at renewal in 2026?
What is a 120-day rate hold and should I get one?
Why are fixed mortgage rates rising when the Bank of Canada is holding?
Can the Bank of Canada raise rates again in 2026?
Is now a good time to refinance my mortgage in Canada?
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About the author
Razi Khan
Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479
Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.
Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.
Learn more about Razi Khan →Sources & References
- Bank of Canada — Policy Interest Rate. bankofcanada.ca
- Bank of Canada — Selected Government of Canada Benchmark Bond Yields. bankofcanada.ca
- OSFI — Minimum Qualifying Rate for Uninsured Mortgages. osfi-bsif.gc.ca
- OSFI — Guideline B-20 Explained. osfi-bsif.gc.ca
- Government of Canada — Interest Act, R.S.C. 1985, c. I-15. laws-lois.justice.gc.ca
- Canada Mortgage and Housing Corporation (CMHC) — Mortgage Loan Insurance. cmhc-schl.gc.ca
- Financial Consumer Agency of Canada — Renewing Your Mortgage. canada.ca/fcac
- Ratehub.ca — Canada Mortgage Rate Forecast. ratehub.ca
- FSRA — Financial Services Regulatory Authority of Ontario. fsrao.ca