Fixed vs Variable Mortgages in 2026: Which Is Better Right Now?

Choosing between a fixed or variable mortgage has always been one of the most important decisions for Canadian borrowers. In 2026—after years of rate volatility and economic uncertainty—the choice matters more than ever.

So, which option is better right now? The answer depends on your financial situation, risk tolerance, and expectations for interest rates in 2026.

The Mortgage Rate Environment in 2026

As of 2026, mortgage rates in Canada have stabilized after the aggressive increases of previous years. Inflation has cooled, but the Bank of Canada remains cautious, signaling that while rate cuts are possible, they will likely be gradual.

This has created a balanced but uncertain environment, where neither fixed nor variable mortgages are a clear winner for everyone.

Fixed-Rate Mortgages in 2026

Pros of Fixed Mortgages

• Predictable monthly payments

• Protection against future rate increases

• Easier budgeting and financial planning

• Peace of mind in uncertain markets

Cons of Fixed Mortgages

• Higher rates compared to variable options (in many cases)

• Larger penalties if you break the mortgage early

• Less benefit if rates decline further

Who Should Choose Fixed?

Fixed mortgages in 2026 are ideal for:

• Risk-averse borrowers

• Families with tight budgets

• First-time buyers seeking stability

• Anyone concerned about future rate volatility

Many borrowers are opting for shorter fixed terms (2–3 years) to balance stability with flexibility.

Variable-Rate Mortgages in 2026

Pros of Variable Mortgages

• Typically lower starting rates

• Potential savings if rates fall

• Often lower penalties for breaking the mortgage

• Flexibility to switch to fixed later

Cons of Variable Mortgages

• Payments or amortization can change

• Less certainty in monthly budgeting

• Higher stress during economic uncertainty

Who Should Choose Variable?

Variable mortgages may suit:

• Borrowers with strong cash flow

• Homeowners comfortable with risk

• Those expecting rate cuts later in 2026

• Investors with financial flexibility

Fixed vs Variable: A 2026 Comparison

FeatureFixed MortgageVariable MortgagePayment StabilityHighMedium to LowInitial RateHigherLowerRisk LevelLowMediumFlexibilityLowerHigherBest ForBudget certaintyRate-cut potential

What Mortgage Experts Recommend in 2026

Mortgage professionals increasingly suggest shorter-term decisions rather than locking in long-term commitments. A 2- or 3-year fixed mortgage or a variable with conversion options can provide flexibility as rates evolve.

Rather than asking “Which is better?”, the smarter question is:

Which mortgage fits my financial situation right now?

How to Decide What’s Right for You

Ask yourself:

• Can my budget handle payment changes?

• How long do I plan to keep this property?

• Am I renewing, buying, or refinancing?

• Would I lose sleep over rate increases?

Answering these honestly often reveals the right choice.

Final Thoughts

In 2026, there is no universal winner between fixed and variable mortgages. The best option depends on your tolerance for risk, financial stability, and long-term plans.

Working with a mortgage professional and comparing multiple lenders can help you secure the right mortgage—not just the lowest rate.