Understanding Fixed and Variable Mortgage Rates: What’s Right for You in Today’s Market?

When choosing a mortgage, one key decision is whether to go with a fixed-rate or variable-rate option.

A fixed-rate mortgage keeps the same interest rate and monthly payments for the full term, usually 1 to 5 years. This offers stability and makes budgeting easier, especially if you plan to stay in your home long-term. This may also prove beneficial when faced with economic and political instability. Fixed-rate mortgages are based on bond yields, especially for Bank of Canada bond yields for similar terms (like 5-year bonds for a 5-year fixed mortgage).

A variable-rate mortgage changes based on your lender’s prime rate, which is influenced by the Bank of Canada's policy interest rate  (also called the overnight rate). Currently, variable rate mortgages are higher than fixed rates, but these mortgages also often have lower penalties if you need to break your term early.

Your best choice depends on your financial goals and comfort with risk. Let’s chat and find the right fit for