Mortgage · Fixed or variable · Figures as of September 6, 2026
No dogma, a calculation: today's rates, the three scenarios economists publish for 2027, and what each costs over five years on a $400,000 mortgage.
In September 2026 the 5-year variable rate trades around 3.45 % and the 5-year fixed around 4.24 %, a 79-basis-point gap. On a $400,000 mortgage amortized over 25 years, variable costs $1,987 a month against $2,156 for fixed. Over five years, if the Bank of Canada follows Desjardins' scenario (a single 50-point hike in the first half of 2027, policy rate at 2.75 %), variable saves about $7,089 in interest; if it follows the markets (100 points more by the end of 2027), the two come out even within $113; if a shock pushes hikes to 150 points in two years, fixed wins by about $5,886. The break-even is simple: variable loses only if its five-year average exceeds 4.24 %, which no published forecast shows. Fixed remains the right choice when a 1-point rise would strain the budget, or when certainty is worth $169 a month to you.
| Benchmark (September 2026) | Value | Source |
|---|---|---|
| Bank of Canada policy rate | 2.25 %, held on September 2, 2026 (7th hold), next decision October 28 | Bank of Canada |
| Bank prime rate | 4.45 % | Chartered banks |
| 5-year variable (best insured files) | about 3.45 % (prime minus 1.00 %) | nesto, September 4, 2026 |
| 5-year fixed (best insured files) | about 4.24 % | nesto, September 4, 2026 |
| Fixed minus variable gap | 79 basis points | calculation |
| Share of new mortgages at variable rates | about 42 % at chartered banks, a high since 2022 | CMHC |
| Policy rate forecast, end of 2027 | 2.75 % (Desjardins, +50 points in the first half of 2027); a little above 3 % (markets); first hike in the first half of 2027 for 63 % of economists (Bloomberg survey) | Desjardins, September 2, 2026 |
These are best-file rates; yours depends on the down payment, CMHC insurance, credit score and lender.
Assumptions: $400,000 mortgage, 25-year amortization, semi-annual compounding (the Canadian norm), payment recalculated at each rate change on the remaining balance. Hike scenarios start in the second quarter of 2027, as the consensus expects.
| Five-year scenario | Monthly payment | Interest paid in 5 years | Difference vs fixed |
|---|---|---|---|
| 5-year fixed at 4.24 % | $2,156 | $79,044 | baseline |
| Variable staying at 3.45 % (no hike) | $1,987 | $63,996 | -$15,048 |
| Variable, Desjardins scenario: +50 points in the first half of 2027 (3.95 %) | $1,987 then $2,091 | $71,955 | -$7,089 |
| Variable, market scenario: +100 points by the end of 2027 (4.45 %) | $1,987, $2,091, then $2,195 | $78,931 | -$113 (even) |
| Variable, shock: +150 points in two years (4.95 %) | up to $2,301 | $84,930 | +$5,886 |
| Variable, stress test: +100 points from month one | $2,203 | $83,061 | +$4,017 |
Reading: variable wins in both scenarios economists publish, and loses only if hikes exceed 100 basis points or come right away. The break-even is an average variable rate of 4.24 % over five years: as long as the five-year average stays below today's fixed, variable costs less. Nobody forecasts a policy rate above 3.25 % before 2028, which would put variable around 4.45 % at worst, the level of today's fixed, but only for the end of the term.
| Your situation | Our reading in September 2026 |
|---|---|
| First purchase, tight budget, no margin | 5-year fixed, or 3-year fixed if you want to renegotiate before 2030. Certainty costs $169 a month; one bad month costs more. |
| Budget that absorbs a 1-point rise (about $216 a month on $400,000) | Variable. It wins in the published scenarios and its penalty is capped; convert if the Bank announces a series of hikes, not after. |
| Likely sale or move within 2 to 3 years | Variable, almost always, because of the three-month-interest penalty. |
| 2027 renewal of a mortgage signed at 1.5 or 2 % in 2021-2022 | Compare both at renewal time, not your memories. On $400,000, going from 1.99 % to 4.24 % adds about $464 a month; to 3.45 %, about $295. Ask for a rate hold 120 days before maturity. |
| Plex investor | Variable most often: exit flexibility and the capped penalty are worth more than certainty. |
| You do not want to choose | Hybrid (one portion fixed, one variable) or short fixed (1 to 3 years) that buys visibility until the first hikes without locking in until 2031. |
Because the 79-basis-point gap is the widest since 2022, because the policy rate has been still since October 2025, and because the dominant scenario for 2027 is a modest (50-point) and late (second-quarter) hike. In 2022, taking variable meant betting against a Bank that was announcing hikes; in 2026, it means betting with a Bank that says it is waiting. That is the difference. What has not changed: variable is a choice for a budget with margin, not for one without. Our Bank of Canada 2027 forecast details the scenarios, and the mortgage calculator redoes the tables with your amount.
Variable, at 3.45 % versus 4.24 % for the 5-year fixed, or $169 less a month on $400,000. Over five years it stays cheaper as long as its average does not exceed 4.24 %, which no published forecast shows.
About 100 basis points if they start in the second quarter of 2027 (even within $113 over five years). Beyond that, or if hikes come right away, fixed wins: a 150-point shock in two years costs about $5,886 more on variable.
When a 1-point rise (about $216 a month on $400,000) would strain your budget, when you keep the property at least five years, or when certainty is worth $169 a month to you. The 3-year fixed is the compromise for those who want to renegotiate before 2030.
Yes, without penalty at most lenders, but at the fixed rate in effect at conversion. Conversion protects against future hikes, not against those already announced.
Also available in French: version française de ce guide.
Published September 6, 2026 by the Loaa & Manseur team, the number 1 team at RE/MAX Platine in 2024 and 2025, 6th RE/MAX team in Quebec, 15th in Canada and in the global top 50 according to the official RE/MAX ranking. Tell us about your project.
Équipe no 1 de RE/MAX Platine en 2024 et en 2025, 6e au Québec, 15e au Canada et dans le top 50 mondial au classement officiel RE/MAX. Réponse en moins de 24 heures, sept jours sur sept.