Mortgage rates in 2026 look steadier. Learn how Bank of Canada policy, renewals, and fixed vs variable choices could affect your payment—and plan now.
Mortgage Rates 2026: What Borrowers Should Do Now
1.15 million Canadian mortgages are up for renewal in 2026. If you’re one of them, your “rate problem” isn’t theoretical—it’s a line item in your monthly budget.
After years of whiplash, the most useful thing about the 2026 outlook is also the least exciting: stability is back (mostly). The Bank of Canada is signalling a rate hold, variable rates have stopped behaving like a carnival ride, and fixed rates will still move around because bond markets can’t sit still.
This post is part of our Interest Rates, Banking & Personal Finance series, where the goal is simple: help you make smart decisions before the renewal letter shows up. Here’s how to plan a mortgage strategy for 2026—whether you’re renewing, buying, or trying to keep options open.
The 2026 rate outlook: “Hold” is the new headline
Answer first: The most likely base case for 2026 is a Bank of Canada rate hold, which means variable mortgage rates should be steadier than they’ve been since 2020.
Ratehub’s analysis points to a central bank that believes its current policy rate is “about right,” with inflation expected to stay near the 2% target through most of 2026. Their working assumption: the economy doesn’t need extra stimulus, and it doesn’t need more tightening either.
Here’s the practical translation for borrowers:
- Variable-rate mortgages: fewer surprises month-to-month, unless a major shock hits.
- Fixed-rate mortgages: still exposed to bond yield swings, which can jump even if the Bank of Canada does nothing.
The risks nobody can schedule on a calendar
The rate hold isn’t a guarantee; it’s a plan. And plans break when big stuff happens.
The Ratehub piece flags trade-related uncertainty (tariffs, and potential issues with the North American trade agreement renewal timeline) as a real wildcard. If trade shocks hit growth hard, the Bank could cut. If inflation re-accelerates, hikes come back into the conversation.
A useful stance for 2026: Treat the base case as stable, but build your mortgage choice assuming you can handle being wrong.
Variable vs. fixed in 2026: why more borrowers will choose variable
Answer first: Variable mortgage rates are expected to stay attractive in 2026, and more borrowers will choose them because they’re currently priced lower than fixed.
Ratehub expects market-leading variable rates to stay below 4%, and notes that for the first time in three years, variable pricing looks better than fixed. That’s not just a rate nerd detail—pricing drives behaviour.
Ratehub also reports that variable-rate inquiries grew meaningfully in 2025: 11.5% of inquiries vs. 7% the year before (a 25.7% increase year-over-year). When fixed rates cost more, people tolerate variable risk.
Why fixed rates could still feel “volatile” even in a steady-policy year
Fixed mortgage rates are tied to bond yields, and bond yields react to:
- stronger or weaker economic data (Canada and the U.S.),
- central bank disagreement and mixed signals,
- market sentiment (including bubble fears and sudden risk-off moves).
So yes, you can have a year where the Bank of Canada holds steady and fixed rates still drift up or down.
A simple decision framework (that doesn’t pretend to predict markets)
If you’re deciding between fixed and variable in 2026, don’t start with “Where are rates going?” Start with how fragile your budget is.
- Choose variable if:
- you can absorb a payment increase if prime rises,
- you want flexibility (and potentially smaller penalties to break),
- you expect to sell, refinance, or move within a couple of years.
- Choose fixed if:
- payment certainty keeps you sleeping at night,
- your budget is already tight,
- you’d be forced into consumer debt if rates rose.
My opinion: If a 1% rate increase would break your budget, you’re not “risk-tolerant”—you’re exposed. In that case, the right move is either fixed, a shorter term with a plan, or lowering the loan size.
Mortgage renewal in 2026: the payment shock is real (but uneven)
Answer first: Many Canadians renewing in 2026 will pay more, but fixed-rate renewers are facing the biggest jump—about 26% higher payments in Ratehub’s example.
The panic narrative in 2023–2024 was “renewals will trigger mass defaults.” That wave hasn’t shown up at scale, largely because rates fell from their peak and because borrowers have had time to pay down principal and build equity.
But “not a crisis” doesn’t mean “no pain.” It means the pain is manageable for more households than initially feared.
What a 26% increase can look like in real dollars
Ratehub’s example for a fixed-rate borrower:
- Original mortgage rate (Dec 2020): 1.39%
- Monthly payment then: $2,224
- Renewing at: 3.94%
- New monthly payment: $2,800
- Increase: $576/month (or $6,912/year)
That’s the kind of increase that quietly rewrites a household budget. It can also change your banking choices (more on that below): higher mortgage payments often mean less cash flow for savings, and sometimes more reliance on credit cards or a line of credit.
Variable-rate renewals: smaller jump because the pain happened earlier
Ratehub’s example for an adjustable variable-rate borrower shows a 4% increase at renewal:
- Original rate: 0.99%, payment $2,121
- By Dec 2025: rate 2.99%, payment $2,690
- Renewing into a variable rate around 3.45%
- New payment: $2,797
- Increase: $107/month (or $1,284/year)
The key point is behavioural, not just mathematical: variable borrowers already lived through the hikes, so the renewal step-up is smaller.
What to do 90–180 days before renewal (the part people skip)
If you’re renewing in 2026, don’t wait for your lender’s offer to set the agenda.
- Run a “renewal stress test” at +1% and +2%. If it hurts, you need a plan (term, amortization, or debt cleanup).
- Check your amortization and prepayment room. A lump-sum before renewal can reduce the payment shock immediately.
- Get your documents ready early. If you want to shop rates, delays cost money.
- Decide what you’re optimizing for: lowest rate, lowest payment, or maximum flexibility. You rarely get all three.
Home buying in 2026: stable rates don’t automatically mean hot prices
Answer first: With “zero rate relief” expected, home sales may stay sluggish, but buyers could benefit from higher inventory and less bidding-war chaos.
Ratehub notes that 2025 underperformed expectations: tariff fears and market upheaval left many buyers stuck in “decision paralysis,” while inventory built up in major markets. That’s a real shift from the tight-inventory psychology that defined so much of the past decade.
What I’d tell a buyer planning for early 2026
If you’re serious about buying, the advantage of a stable-rate environment is that it turns the market from emotional to operational. You can plan.
- Budget for the payment you can afford, not the price you want. Mortgage qualification and real affordability aren’t the same thing.
- Get clear on term risk. If fixed rates are jumpy, a shorter fixed term can be a reasonable compromise.
- Keep liquidity. Winter 2025 into early 2026 is when a lot of households feel cash pressure. Having an emergency fund is bargaining power.
And a blunt stance: If you need rates to fall more to afford the home, you can’t afford the home. Waiting for “rate salvation” is how people stretch into trouble.
How to build a 2026 money plan around your mortgage
Answer first: The smart 2026 strategy is to treat your mortgage as the “anchor” of your personal finances—then align savings and debt so higher payments don’t spill into expensive borrowing.
This is where the broader Interest Rates, Banking & Personal Finance lens matters. Mortgage decisions ripple into everything else.
Keep higher payments from turning into high-interest debt
If your mortgage payment rises, the most common failure mode is using revolving credit to cover basics.
Practical guardrails:
- Automate a smaller savings amount rather than stopping savings entirely. Consistency beats perfection.
- Pay down the highest-interest debt first (almost always credit cards).
- Avoid “payment camouflage.” Extending amortization can reduce payments, but it can also lock you into paying more interest for longer.
Use a “three-bucket” approach for 2026 cash flow
I’ve found this simple structure works because it’s easy to maintain:
- Mortgage + essential bills (non-negotiable)
- Safety buffer (emergency fund and sinking funds)
- Goals (investing, extra mortgage payments, renovations)
If renewals raise your payment, don’t steal from Bucket #1. Cut Bucket #3 first, then rebuild it when you’ve adjusted.
People also ask: “Should I lock in now or wait?”
Answer first: If you’re within 120–180 days of renewal, you can often secure a rate hold while you keep shopping, which reduces the risk of waiting.
The better question is: What would you do if rates rose by 0.50% before you sign? If the answer is “panic,” you shouldn’t leave it to the last minute.
A 2026 mortgage strategy that holds up under stress
Ratehub’s 2026 predictions point to a calmer year for variable borrowers and a still-choppy backdrop for fixed rates. The bigger story, though, is renewal math: with 1.15 million mortgages renewing in 2026, households will be forced to make deliberate choices about term length, payment size, and risk.
If you’re renewing, run your numbers now and decide what you want: certainty, flexibility, or the lowest possible rate. If you’re buying, treat stability as permission to be patient and disciplined, not as a reason to stretch.
Mortgage rates in 2026 may be steadier, but your results won’t be automatic. Planning is the real rate relief. What’s the one change you’d make today—term, payment, or debt cleanup—that would make your 2026 decision feel easy instead of urgent?