Fixed vs Variable Mortgage in Canada (2026): The Honest Tradeoff

Fixed vs variable is the most-debated decision in Canadian mortgage shopping. The traditional advice was “variable wins ~75% of the time.” Then 2022 happened, variable rates quadrupled in 18 months, and the conventional wisdom got rewritten in real time. Here’s the honest 2026 tradeoff.

What each one actually is

• Fixed-rate mortgage: Your interest rate is locked for the full term (typically 5 years). Payment is the same every month, every year. At end of term, you renew at whatever the current rate is.
• Variable-rate mortgage: Your interest rate fluctuates with the Bank of Canada’s overnight rate (the “prime rate”). When the BoC raises rates, your rate rises. When they cut, your rate drops.

Variable comes in two flavors (most people don’t know this)

• Variable-rate, FIXED PAYMENT (most common): Your monthly payment stays the same, but the split between interest and principal shifts as rates change. When rates rise, more of your payment goes to interest, less to principal. This was the trap in 2022 — many Canadians had “trigger rates” where 100% of payment was going to interest and the principal was actually growing.
• Variable-rate, VARIABLE PAYMENT: Your payment adjusts when rates change. More immediate cash flow impact but no trigger-rate surprise. Less common but cleaner.