If you’re shopping for a mortgage or coming up on a renewal, you’ve probably noticed the fixed vs. variable debate feels less settled than ever. The Bank of Canada just held its policy rate at 2.25% for a sixth consecutive meeting, and CMHC data shows more borrowers shifting into variable-rate mortgages as renewal pressure starts to ease. So which one is right for you? Here’s how to think it through.

Where rates actually stand right now

After a stretch of hikes and cuts, the Bank of Canada’s rate has settled at 2.25%, and policymakers appear to be in wait-and-see mode. Some officials are watching for signs the economic recovery is losing steam; others are more focused on inflation expectations creeping back up. That tension matters for you: it means the next move isn’t obvious, and anyone who tells you with certainty where rates go from here is guessing.

Meanwhile, fixed mortgage rates have ticked higher recently on the back of rising bond yields, even as variable rates have held steadier. That’s flipped the usual math for a lot of borrowers.

Why more borrowers are choosing variable

CMHC recently reported that borrowers are increasingly turning to variable-rate and shorter-term mortgages as renewal pressure eases. A few reasons this is happening:

• The rate gap has narrowed. With fixed rates pushed up by bond market moves, the traditional premium you pay for fixed-rate certainty is smaller than it was a year or two ago.
• The BoC’s hold suggests less near-term risk. Six straight holds signal the central bank isn’t in a hurry to raise rates further, which takes some of the sting out of variable-rate exposure.
• Breaking a mortgage may cost less. If bond yields keep climbing, some lenders’ penalty calculations for breaking a fixed mortgage actually shrink, a small silver lining if your plans change mid-term.

Why fixed still makes sense for a lot of people

None of this means variable is automatically the better choice. Fixed rates remain the right call if:

• You need budget certainty and don’t want your payment to move if the Bank of Canada changes course.
• You’re risk-averse or on a tight monthly budget where a rate increase would cause real strain.
• You plan to stay in the mortgage for the full term without breaking it early.

Rate volatility cuts both ways. A hold today doesn’t guarantee a hold at the next meeting, and inflation expectations could easily tip the Bank toward tightening again.

A simple way to decide

Ask yourself three questions:

1. Can my budget absorb a rate increase of 1-2%? If a payment jump would be a serious problem, lean fixed.
2. How long do I realistically expect to keep this mortgage? Shorter horizons and flexible plans favor variable, especially with today’s narrower rate gap and potentially lower break penalties.
3. How much rate uncertainty can I live with day to day? If checking the news for BoC announcements would stress you out, fixed buys you peace of mind, literally.

There’s no universally correct answer. The right choice depends on your income stability, how long you’ll hold the mortgage, and your personal tolerance for payment swings.

The bottom line

The Bank of Canada’s sixth consecutive hold at 2.25% has narrowed the traditional cost gap between fixed and variable mortgages, and it’s part of why more borrowers are opting for variable right now. But more people doing it isn’t a strategy, your decision should come down to your own budget, timeline, and risk tolerance.

If you’re renewing soon or shopping for a new mortgage, let’s run the numbers together. We’ll walk through both scenarios side by side so you can see exactly what a rate move in either direction would mean for your payment, and choose with confidence instead of guesswork.

Ready to compare your options? Contact us today for a free rate review.