2026 Mortgage Rates: Plan Your Renewal Without Surprises

1.15 million Canadian mortgages are scheduled to renew in 2026. If you’re one of them, the biggest risk isn’t a sudden spike in the Bank of Canada policy rate. It’s getting complacent because rates finally feel… normal.

After years of whiplash, 2026 is shaping up to be a planning year for borrowers: variable rates look steadier, fixed rates may stay jumpy, and renewal “payment shock” is still real—just more predictable. In this installment of our Interest Rates, Banking & Personal Finance series, I’ll translate the latest mortgage-rate outlook into practical moves you can make now, especially if you’re renewing or buying in the first half of 2026.

What 2026 looks like in plain English: stability, not “cheap”

Answer first: 2026 is likely to bring a steady Bank of Canada policy rate and calmer variable mortgage rates, but it won’t feel like a return to 2020–2021 pricing.

The Bank of Canada has signalled that the current policy rate is “about right,” with inflation expected to hover close to the 2% target through much of 2026. That translates to fewer surprises for variable-rate borrowers unless there’s an economic shock (trade disruptions and tariffs are the obvious wildcards).

Here’s the stance I’m taking: Don’t wait for “better” rates as your plan. Plan as if the rate environment is broadly stable and focus on what you can control—your renewal strategy, amortization choices, and cash-flow buffers.

The number that matters most: your payment sensitivity

A useful way to think about 2026: it’s less about guessing where rates go and more about knowing how your budget reacts.

• If your mortgage payment rises by $100/month, are you fine?
• If it rises by $500/month, does that trigger credit card debt?
• If you had to renew at 0.50% higher than you expected, would you still qualify and sleep at night?

In a steady-rate year, borrowers who’ve done this homework end up with better outcomes than borrowers who chase the lowest advertised rate.

Variable mortgages in 2026: calmer ride, growing popularity

Answer first: Variable rates are positioned to remain relatively stable in 2026, and because they’re currently priced competitively, more borrowers will choose variable—especially if fixed rates keep wobbling.

With the Bank of Canada holding steady, variable mortgage rates can settle into a more predictable range. Rate watchers have already seen the shift: variable rates have become more attractive relative to fixed options, and borrower interest has been rising.

From the source outlook:

• The policy rate has been cut multiple times since mid-2024, landing at 2.25% by late 2025.
• Prime is cited at 4.45%.
• Market-leading variable rates are expected to stay below 4% in early 2026 conditions.

When variable is the right call (and when it isn’t)

Variable can be smart when:

• You have budget room and can handle temporary bumps.
• You’re planning to sell within a shorter window (penalties can be lower than fixed, depending on lender and terms).
• You want the option to convert to fixed later (check the conversion rules).

Variable is a bad fit when:

• Your budget is already tight and you can’t absorb even a modest increase.
• You lose sleep over uncertainty.
• Your income is variable or at risk (commission-heavy, contract work, seasonal business).

My rule of thumb: If payment certainty is your stress point, pay for certainty. A slightly higher fixed rate can be cheaper than the financial spillover of stress (late fees, credit card balances, missed investing).

Fixed mortgage rates in 2026: bond volatility is the hidden boss

Answer first: Fixed rates may remain volatile in 2026 because they’re driven more by bond yields than the Bank of Canada’s overnight rate.

Most borrowers track the Bank of Canada announcements like they’re the only driver. For variable mortgages, that’s fair. For fixed mortgages, it’s incomplete.

Fixed-rate pricing is heavily influenced by bond yields, which can jump around even when the central bank does nothing. In 2026, the outlook highlights several forces that can push yields higher (stronger growth, U.S. policy uncertainty, market froth). Translation: you could see fixed rates change even in a “rate-hold” year.

How to shop fixed rates without getting played

If you’re renewing into a fixed rate in 2026, your biggest edge is process:

1. Start early (90–120 days out). Many lenders allow rate holds. Even if you don’t lock, you’re ready.
2. Compare the real cost, not the headline rate. Prepayment privileges, portability, and penalty calculations can dwarf a 0.10% rate difference.
3. Choose term strategically. In uncertain years, a 2- or 3-year fixed can be a solid compromise—if the pricing makes sense.

A steady plan beats perfect timing.

Mortgage renewals in 2026: payment shock is smaller, but still sharp

Answer first: Renewing borrowers in 2026 should expect higher payments than their 2020–2021 rates, with fixed-rate renewals facing the largest jump.

The renewal wave has been building for a while, and the numbers are big:

• 1.15 million mortgages renewing in 2026
• 940,000 more renewing in 2027

The feared “default wave” hasn’t shown up as dramatically as some predicted, largely because rates eased from peak levels and borrowers have paid down principal and built equity. That’s good news. But the monthly payment increases are still meaningful.

Example: fixed-rate renewal math you can feel

The source provides a clear scenario for a typical borrower:

• Purchase price: $607,280
• Down payment: 10%
• Amortization: 25 years
• Original (Dec 2020) fixed rate: 1.39%
• Original payment: $2,224/month
• Renewal fixed rate used: 3.94%
• New payment: $2,800/month

That’s +$576/month, or +$6,912/year—a 26% increase.

This is why I push borrowers to stop asking, “Will rates drop?” and start asking, “Can my budget carry my renewal payment?”

Variable renewals: smaller jump, because you already lived through it

For variable borrowers, the source’s modeled renewal increase is far smaller:

• Original variable rate: 0.99%
• Original payment: $2,121/month
• By Dec 2025 rate: 2.99% and payment $2,690/month
• Renewal variable option used: 3.45%
• New payment: $2,797/month

That’s +$107/month, or +$1,284/year—about a 4% increase.

The lesson: variable borrowers absorbed the pain earlier, so renewal doesn’t sting as much now.

Your 2026 borrower playbook: five moves that actually help

Answer first: The best 2026 mortgage strategy is proactive: run scenarios, protect cash flow, and negotiate from a position of strength.

Here are five practical moves I’d prioritize if you’re renewing or buying in 2026.

1) Run a renewal stress test on your own budget

Do this even if you’re not required to “stress test” for qualification.

• Take your expected renewal payment.
• Add $200/month and see what breaks.
• Add $500/month and see what breaks.

If the answer is “we’d carry a balance on the credit card,” your mortgage plan is now a debt-management plan.

2) Build a “payment shock buffer” before you renew

If you’re renewing mid-2026, you still have time to prep:

• Set aside the difference between your current payment and your projected renewal payment.
• Put it in a separate savings bucket.

Example: If you expect a $300/month increase, start saving $300/month now. By renewal time, you’ve trained your budget and built a cushion.

3) Don’t accept your lender’s first renewal offer

Most lenders price renewals with a margin because many borrowers don’t shop.

• Ask for a better rate.
• Ask for improved prepayment terms.
• Ask how penalties are calculated.

Even small improvements matter over a multi-year term.

4) Choose the term based on your life, not your prediction

A mortgage term is a lifestyle decision:

• Planning a move or job change? Shorter term may reduce risk.
• Stable long-term home and tight budget? Longer fixed term may buy peace of mind.
• Uncertain market and you want optionality? Mid-length terms can balance both.

Your mortgage should fit your life’s timeline, not the news cycle.

5) If you’re buying in 2026, negotiate like a buyer’s market exists

The outlook suggests 2025 underperformed, with inventory building in major centres and demand held back by uncertainty. If that carries into early 2026, buyers may keep some leverage.

That doesn’t mean lowballing everything. It means:

• Put financing and inspection conditions where appropriate.
• Negotiate closing dates that work for your cash flow.
• Keep funds for closing costs so you’re not immediately financing expenses.

Rate stability plus extra inventory is a rare combo. Prepared buyers do well in that environment.

The 2026 outlook for home sales: flat doesn’t mean hopeless

Answer first: With “zero rate relief” expected in 2026, home sales could remain sluggish, but motivated buyers may find better selection and negotiating room.

A lot of people treat housing markets like they’re either “hot” or “dead.” Reality is messier. If rates don’t fall further, demand doesn’t get that extra push. But if inventory is higher and prices aren’t sprinting away, the market becomes more practical.

If you’re a buyer, the win isn’t bragging about buying at the bottom. The win is buying a home you can comfortably afford with a mortgage you can renew without panic.

A quick self-check before 2026 starts

Answer first: If you can answer three questions clearly, you’re ahead of most borrowers heading into 2026.

1. What’s my renewal month and what rate/payment am I budgeting for?
2. If my payment rose by $300–$500/month, what would I cut first?
3. Am I choosing fixed or variable based on cash-flow reality—or just vibes?

If you don’t like your answers, good. That means you found the work to do while you still have time.

As this Interest Rates, Banking & Personal Finance series keeps emphasizing, the best defense in a shifting interest rate environment is boring fundamentals: know your numbers, protect cash flow, and manage debt before it manages you.

What’s your plan for your next renewal—are you optimizing for the lowest rate, or the smoothest payment for the next few years?