🔄 Fixed vs Variable Mortgage Rates: Which Is Winning This Summer?

Introduction

In the summer of 2025, fixed and variable mortgage rates are in an intriguing duel. As the Bank of Canada signals potential easing and bond yields shift, borrowers are asking: which mortgage rate type has the edge right now? In this post, we compare the strengths and risks of both options and explore how market conditions are tilting the balance.

1. What Drives Fixed vs Variable Rates

• Fixed-rate mortgages are tied to bond yields — they reflect long-term interest expectations, and once locked in, your rate doesn’t change.

• Variable-rate mortgages (or adjustable rates) are linked to the prime rate, which moves with the Bank of Canada’s overnight rate.

As inflation moderates and markets anticipate rate cuts, variable rates may respond more quickly than fixed ones. However, fixed rates protect against surprise rate hikes.

2. Summer 2025 Trends: What’s Happening Now

• Variable rates have been making a comeback. After recent BoC cuts, 5-year variable rates are now near parity with fixed alternatives.

• Meanwhile, many fixed rates remain elevated, partly because lenders are factoring in uncertainty in bond markets.

• Analysts expect further BoC cuts in 2025, which would favor borrowers on variable plans since their rates adjust sooner.
  
  

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  4. Tips for Borrowers This Summer

  • If you choose variable, ensure your budget can handle rate swings.

  • If you prefer fixed, consider a shorter term (2–3 years) to avoid being locked in too long.

  • A hybrid mortgage (part fixed, part variable) can balance both sides.

  • Always compare offers from multiple lenders — the spread between fixed and variable can vary.