Fixed vs Variable in 2026

The fixed-vs-variable debate is genuinely different in a falling-rate environment than a rising one. Here is how we walk clients through it in 2026.

The two products, plainly

A fixed-rate mortgage locks your interest rate — and therefore your payment — for the term (typically 3 or 5 years). A variable-rate mortgage moves with the lender's prime rate; some variables keep your payment steady and shift the principal/interest split, others adjust the payment itself. Both are amortized over 25–30 years.

Where the spread sits

Historically, variable rates have beaten fixed roughly 70% of the time over a full 5-year term (a finding popularised by Dr. Moshe Milevsky's original 2001 study and confirmed in subsequent updates). In today's market the spread between a discounted 5-year fixed and a 5-year variable is unusually narrow, which changes the calculus.

Choose fixed if…

• Your budget has no room for a payment increase.
• You value certainty over squeezing out the last basis point.
• You plan to hold the property through the full term.

Choose variable if…

• You have a real financial buffer and can weather a surprise hike.
• You expect to move, refinance, or break the mortgage inside the term — variable penalties are typically 3 months' interest vs. the interest-rate differential on fixed.
• You believe the BoC continues to ease and want to participate in the cuts as they happen.

"The right mortgage is the one that lets you sleep at night and still fits the plan when rates surprise you."