Find the best 5-year variable mortgage rates in Canada

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5-year variable mortgage rates in Canada

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ratehub.ca insights: Three- and five-year government bond yields surged last week, swiftly moved lower and then shot back up again. If bond yields hold at their current levels, fixed mortgage rates should remain stable. If yields continue climbing, lenders could feel pressured to increase their fixed rates. Analysts are split over whether the Bank of Canada will raise its overnight rate on Wednesday, which would increase variable mortgage rates. A rate hold may be more likely based on the state of the labour and housing markets.

Transaction type

Rate type

Purchase price

Down payment $

Rate term

Amortization

Occupancy

Payment frequency

Rate	Provider	Payment
	Canadian Lender Ratehub.ca Exclusive	^$1,959
	Meridian Credit Union	^$1,961
	Big 6 Bank	^$1,994
	Canwise A Ratehub.ca Company	^$1,994
	Equitable Bank	^$1,994
	Scotiabank	^$2,005
	Alterna Savings	^$2,015
	CMLS Financial	^$2,015
	First National	^$2,015
	RBC Royal Bank	^$2,047
	MCAP	^$2,057
	TD Bank	^$2,066
	National Bank of Canada	^$2,079
	Bank of Montreal	^$2,105
	ICICI Bank Canada	^$2,176
	Tangerine	^$2,068
	CIBC	^$2,090

Frequently asked questions

Which lenders offer the lowest 5-year variable rates today?

As of October 27, 2026, the best high-ratio, 5-year variable rate in Canada was 3.43%. If you’re specifically comparing what the best variable mortgage rate in Canada is, visit our rate table to see the 5-year variable mortgage rates offered by Canada’s Big Banks and top lenders. For a personalized quote, enter basic details like your down payment, purchase price, and location, and get an accurate rate in under two minutes.

Will variable mortgage rates go down in 2026?

Declines in variable mortgage rates remain possible in 2026, but the timing is uncertain. After the Bank of Canada cut rate cuts nine times between June 2024 and October 2025, the central bank has now held its overnight rate at 2.25%, keeping the prime rate unchanged at 4.45%. As a result, variable mortgage rates have remained relatively stable, with the lowest available five-year variable rate currently sitting at 3.30%. Whether variable rates move lower from here will depend on the Bank of Canada’s next policy decisions. Inflation is hovering around 3%, with higher energy prices and tariffs adding upward pressure, which could keep the Bank on hold for longer. However, if the trade conflict begins to weigh more heavily on consumer spending, employment and business activity, the Bank could eventually have room to cut rates.

When is a 5-year variable mortgage better than a 5-year fixed?

A 5-year variable mortgage term can be a better choice when interest rates are stable or expected to decline. As of September 2026, the Bank of Canada held its overnight rate at 2.25%, keeping the prime rate at 4.45%. This has maintained the lowest available five-year variable mortgage rate at 3.30%, compared with 4.09% for the lowest insured five-year fixed rate. When this spread is meaningful, variable borrowers can save more over time — though future rate cuts now appear less likely given stronger economic data. However, it is prudent to keep in mind that variable-rate mortgages come with risks. Any increase in the prime rate will result in a higher mortgage rate and higher monthly payments. If your variable rate comes with a fixed payment, then the portion of your monthly payment that goes toward interest will increase and, in extreme cases, can lead to you hitting your trigger rate — the point at which payments no longer reduce your principal. If this continues, you risk negative amortization, meaning your principal balance grows instead of shrinking. Borrowers with fixed-payment variable mortgages should be aware of this risk. Before getting a variable-rate mortgage, it is best to make sure your finances can cover the risk of the prime rate rising during your term.

How to lock or convert a 5-year variable mortgage to a fixed rate?

You can usually convert your variable-rate mortgage to a fixed rate at any time, either with your current lender or by refinancing with a new one. The simplest option is an internal conversion, where your existing lender moves you to a fixed term (usually equal to or longer than what’s left on your current mortgage). No new approval is required, but you’ll get the lender’s posted or discounted fixed rate. If you want to switch to another lender’s fixed rate, you’ll need to refinance, which involves a full re-qualification that replaces your current mortgage with a new one. Refinancing may offer a lower rate, but you’ll face potential break penalties, legal costs, and new stress-test requirements. Before locking in, it’s important to weigh the rate spread between your current variable rate and the fixed rate you’d move to. If fixed rates are significantly higher, locking in could increase your payments. However, if market signals point to rising rates or if you’d prefer stable payments, converting can offer peace of mind.

Is now a good time for a variable rate mortgage?

Whether a variable-rate mortgage is right for you depends largely on your comfort with payment fluctuations. Variable rates move with the Bank of Canada’s overnight rate, which the Bank held at 2.25% in September 2026. This keeps the prime rate at 4.45%, meaning the current variable mortgage rates remain lower than many fixed-rate alternatives. The best five-year variable rate is at 3.30%, compared to the 4.09% for the best insured fixed rate. If you are comfortable with some risk and your finances can support possible payment increases, a variable rate may be appealing as it can provide you with some savings; if certainty is more important, a fixed rate may be the better choice.

How does the Bank of Canada's rate affect variable mortgage rates?

Variable mortgage rates are directly correlated with the Bank of Canada’s overnight lending rate. When the Bank raises or lowers this policy rate, lenders adjust their prime rate — the benchmark used to price variable-rate mortgages. Variable rates are usually expressed as prime + a discount (for example, prime – 1.00%). So, when the Bank of Canada cuts its rate, the prime rate falls, and with that, variable mortgage rates decrease almost immediately. As of September 2026, the Bank held its overnight rate at 2.25%, keeping lenders’ prime rate at 4.45%. This has helped keep variable mortgage pricing stable, with the lowest available five-year variable mortgage rate currently sitting at 3.30%, well below the levels seen during the 2023 peak.

What is the stress test for a mortgage with a variable rate

The mortgage stress test ensures borrowers can handle their payments if rates increase. For variable-rate mortgages, borrowers must qualify at the higher of the Bank of Canada’s qualifying rate (currently 5.25%) or their contract rate + 2%. As of October 27, 2026, the lowest 5-year variable rate in Canada is 3.43%. Since adding 2% to this rate exceeds the qualifying rate, most borrowers are stress tested at their contract rate + 2%.

What is Canadian Lender and Big 6 Bank?

On our rate comparison tables, Ratehub.ca features generic brands like “Canadian Lender”. The “Canadian Lender” rate represents the lowest rate our brokerage can offer among the different lenders we work with. This means that this rate can be from a Big Bank, trust company, or lending company. The reason we do not advertise the rate under the name of the actual lender offering it, is because the rate is only available through our brokerage, via a special volume discount or promotion.

Similarly, “Big 6 Bank” is another generic provider that is used to advertise the lowest Big Bank rate that the Ratehub.ca brokerage can offer.

5-year variable rates vs. 5-year fixed rates

From 2007 - Today

Ratehub's guide to 5-year variable mortgage rates

Jamie David, VP of Marketing and Mortgages

October 26, 2026

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If you’re just starting to explore Canadian mortgages, it’s normal to ask: What is a variable rate mortgage in Canada, and why does it fluctuate? A variable rate rises or falls with changes to the prime rate, which is directly influenced by the Bank of Canada’s overnight lending rate. Understanding this is especially helpful if you’re weighing fixed vs. variable, renewing your mortgage, or trying to decide whether you should lock in your variable rate mortgage. A clear grasp of how variable rates behave can make your next mortgage decision much easier.

5-year variable mortgage rates: Quick facts

Variable mortgage rates fluctuate with the prime lending rate.
Variable rates are typically stated as "prime plus or minus a percentage".
17.2% of all mortgage requests made to Ratehub.ca from January - November 2025 were for 5-year variable-rate mortgages.
25% of consumers opted for a variable-rate mortgage in 2025, up from 23% in 2024. (Source: 2025 CMHC Mortgage Consumer Survey)

How the Bank of Canada's latest rate decision affects variable rate mortgages

On September 2, 2026, the Bank of Canada held its overnight rate at 2.25%, leaving variable borrowing costs unchanged. The decision was widely expected as the Bank continues to balance persistent inflation pressures from tariffs and higher energy prices against the risk that a prolonged trade war could weaken economic growth.

For homeowners with variable-rate mortgages, the recent announcement means no immediate change to borrowing costs. Lenders' prime rates remain at 4.45%, keeping variable mortgage rates, monthly payments and interest costs steady for now.
Fixed mortgage rates are likely to stay elevated since they are driven largely by Government of Canada bond yields. The war in Iran's impact on oil prices, and those oil prices' effect on inflation, have cause yields to soar.
Fixed rates under 4% may not be return for some time. The lowest 5-year fixed rate in the country is currently 4.34%. The lowest 3-year fixed rate is 3.49%.
The Bank's decision also leaves borrowing costs unchanged for other variable-rate products tied to prime, including home equity lines of credit (HELOCs), personal lines of credit and certain variable-rate loans.
Future Bank of Canada rate decisions depend on whether inflation or economic weakness becomes the greater concern. If the trade war begins to weigh more heavily on employment, spending and business activity, the Bank could have room to cut rates. However, if tariffs and higher energy costs continue to keep inflation elevated, rates may remain unchanged for longer.

October 2026 housing and mortgage market updates

Home buyers and renewing homeowners will face a challenging mortgage market this fall. Inflation rose in September, fixed mortgage rates remain elevated and variable rates could be set to increase.

Real estate update – October 2026

September was a down month for the Canadian housing market. National home sales dipped by 2.3% on a monthly basis and fell 7.7% year-over-year, according to the Canadian Real Estate Association (CREA). New listings edged down 1.8% from August, signalling lower confidence among sellers. The national sales-to-new-listings ratio was 48.8% in September — balanced, but lower than the long-term average for the month.

Home prices showed signs of softening. The national MLS Home Price Index was down 0.4% from August and 3.4% lower than a year earlier. The national average home price, $666,538, was 1.6% lower than in September 2025.

A pullback in sales and prices is not the sign of an enthusiastic fall housing market. But weaker housing demand is a predictable outcome when buyers are challenged by high home prices, elevated mortgage rates and rising consumer costs. The market's working the way it should; it's just not tilted in buyers' favour.

Inflation update – October 2026

Canada's annual inflation rate increased to 3.1% in September, more than a full percentage point above the Bank of Canada's 2% inflation target. Inflation continues to be driven by a single input: gasoline. Gas prices were 27.8% higher than a year earlier. Excluding gasoline, inflation was 2.2%, down from August's 2.4% reading.

Borrowers considering a variable-rate mortgage should keep an eye on inflation, since the latest numbers cloud the future of variable rates. Rising inflation can lead to higher variable rates.

The Bank of Canada uses its overnight lending rate to manage inflation. The overnight rate has sat at 2.25% all year, but the Bank said in September that higher energy prices and tariffs have increased the risks to its inflation outlook. If energy prices keep inflation above 3%, the Bank may be forced to raise the overnight rate. An increase in the overnight rate would lead to a similar increase in variable mortgage rates.

Housing market forecast for 2026

The housing market in Canada is expected to stay relatively soft throughout the remainder of the year. Cheaper homes are giving buyers a bit of breathing room, but borrowing costs are still high. Ratehub's latest Home Affordability Report shows that 12 of 13 major Canadian markets became more affordable in September due to declining home prices. Halifax led the way, as its average home price fell by $22,100 and the income needed to qualify for a mortgage decreased by $4,160.

Mortgage rates could eat into that progress, though. In September, the lowest five-year fixed rate went from 4.09% to around 4.24%. And the five-year Government of Canada bond yield climbed from 3.33% at the end of August to 3.69% in September, putting upward pressure on fixed rates.

CMHC's latest update to its Housing Market Outlook calls for weak housing activity in the near term. It forecasts that average home prices will fall in 2026, then slowly recover through 2027 and 2028. Housing starts are also expected to drop, since weaker demand, high construction costs and large inventories are holding back new building.

Between now and the end of the year, prices and rates could move in opposite directions. Buyers in some markets may find better deals, but rising mortgage rates could limit affordability gains.

Best 5-year variable mortgage rates

Rate	Term	Type	Provider
3.43%	5 years	Variable	Canadian Lender
3.44%	5 years	Variable	Meridian Credit Union
3.60%	5 years	Variable	Big 6 Bank
3.60%	5 years	Variable	Canwise
3.60%	5 years	Variable	Equitable Bank

How does a variable-rate mortgage work in Canada?

When you get a variable rate for a mortgage, your interest rate changes when your lender’s prime rate changes. The prime rate itself is influenced by the Bank of Canada’s overnight lending rate, which the Bank adjusts to control inflation and economic growth. When the Bank cuts its rate, your mortgage interest rate — and sometimes your payments, depending on your mortgage type — go down. When it raises rates, your costs go up.

There are two main types of variable-rate mortgages in Canada:

Adjustable-payment variable mortgage: Both your interest rate and payment amount change whenever the prime rate moves. Your amortization (time to pay off the loan) stays consistent.
Fixed-payment variable mortgage: Your payment stays the same even if the prime rate rises or falls. However, the amount that goes toward your principal versus interest shifts. If rates rise significantly, you could hit your trigger rate, where payments no longer cover the full interest owed — leading to negative amortization unless you increase payments or refinance. While rare, this phenomenon occurred in the latter half of 2023, when the Bank of Canada aggressively increased its benchmark rate.

Most variable-rate mortgages are quoted as prime plus or minus a discount (for example, prime – 1.00%). As of October 2025, with the prime rate at 4.45%, a discount of 1% would give you an effective rate of 3.45% — the best 5-year variable mortgage rate currently available on Ratehub.ca.

What drives changes in 5-year variable mortgage rates?

5-year variable mortgage rates change based on several key economic factors — most notably, the Bank of Canada’s overnight lending rate. When the Bank of Canada adjusts its policy rate, lenders typically follow by changing their prime rate within a few days. That directly affects how much borrowers pay on their variable-rate mortgages.

Here are the main factors that drive those changes:

Bank of Canada policy rate: The BoC raises or lowers its overnight rate to control inflation and stabilize the economy. When rates go up, variable mortgage rates increase; when they fall, borrowing costs drop.
Inflation: Rising inflation pushes the Bank to raise rates to cool spending. When inflation slows, the Bank can cut rates to stimulate growth.
Employment and economic growth: Strong job creation and higher consumer spending often lead to higher interest rates, while slower growth or higher unemployment typically prompts rate cuts.
Global events and market conditions: Trade disruptions, commodity prices, and international monetary policies can influence Canada’s economic outlook and, in turn, mortgage rate decisions.
Lender competition and funding costs: Each lender sets its own discount or premium to the prime rate (for example, prime – 1.00%). These adjustments depend on competition, funding costs, and risk appetite.

Because variable rates fluctuate with these factors, they can offer savings when the economy is stable or cooling, but they also carry the risk of higher payments when inflation or growth rebounds.

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Pros and cons of choosing a 5-year variable mortgage in Canada

A 5-year variable mortgage can offer meaningful savings and flexibility, but it requires comfort with uncertainty and changing payments. So if you’re wondering, “Should I lock in my variable rate mortgage in Canada?” here are some pros and cons to consider.

Pros

Lower initial rates and potential long-term savings: Variable mortgages are typically priced below fixed rates, currently around 3.45% vs. 3.79%, and can cost less overall if the Bank of Canada continues to ease policy.
Flexibility to convert to a fixed rate: Most lenders let you lock into a fixed term mid-way through your mortgage without breaking it, offering stability if market conditions shift.
Smaller penalties for breaking early: Variable-rate mortgages usually charge only three months’ interest if you refinance or sell, compared to the potentially high interest-rate differential (IRD) penalties tied to fixed loans.
Faster principal repayment in a falling-rate environment: When rates drop, a larger portion of each payment goes toward your principal, helping you build equity faster.
Historically lower total borrowing costs: Over long periods, variable rates have outperformed fixed rates about 80% of the time, according to multiple Canadian mortgage studies.

Cons

Exposure to rate volatility: Variable mortgages rise or fall with the prime rate, meaning your interest costs (and sometimes your payments) can change several times during your term. This unpredictability can make it harder to plan long-term budgets, especially if household income is fixed.
Trigger-rate risk on fixed-payment variables: If your payment doesn’t change when rates rise, more of it goes toward interest until you hit the trigger rate, where payments no longer cover the full interest.
Possible negative amortization: Once at the trigger point, unpaid interest gets added to your balance — your mortgage grows instead of shrinking until you increase payments or refinance.

How 5-year variable mortgage rates and their popularity have changed over time

Looking at historical mortgage data helps put today’s rates in perspective. The table below shows the lowest 5-year variable mortgage rates in Canada over recent years, alongside other popular terms. It highlights how rates that once sat below 1% in 2020 and 2021 surged past 5% by 2023 as the Bank of Canada raised its overnight rate to curb inflation. Since then, multiple rate cuts through 2024 and 2025 have gradually brought variable rates back down to the mid-3% range.

Source: Ratehub Historical Rate Chart

Historically, fixed rates are generally more popular; however, in the wake of the COVID-19 pandemic, the Bank of Canada cut its target overnight lending rate in March 2020, which caused the prime rate to go down. As a result, variable-rate mortgages experienced a surge in popularity; roughly 25% of all mortgages in Canada at the end of 2022 were variable-rate mortgages, in contrast to 20% in 2019.

But as borrowing costs spiked in 2022–2023, many borrowers shifted back to fixed terms for payment stability. As of 2025, fixed rates remain the most common, but variable products are regaining ground as rates fall. According to the 2025 CMHC Mortgage Consumer Survey, 25% of consumers opted for a variable-rate mortgage in 2025 (up from 23% in 2024). The table below, sourced from the same survey, shows the popularity of variable-rate mortgages in 2025 among the four main categories of people who contracted mortgages.

First-time home buyers	Repeat buyers	Renewers	Refinancers
25%	16%	24%	31%

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4.34%

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The bottom line: Should I get a 5-year variable rate mortgage?

As long as you're comfortable with risk and understand that variable rates can fluctuate throughout your term, then a 5-year variable rate is a reasonable choice. Since variable rates do have the inherent risk of rate increases, make sure you have enough money in your budget to cover a higher mortgage payment if rates increase.

If you're still not sure about what mortgage product is right for you, it's a good idea to speak to a mortgage broker. Consultations are free, and you'll leave with expert advice, personalized to you.

For more information, check out these helpful pages!

Ratehub.ca education centre

Buying
So you've made the decision to buy a new home! The first step is to figure out how much you can afford to spend.
read more
Renewing
If your current mortgage is up within four months, now's the time when most lenders will allow you to start the early mortgage renewal process.
read more
Refinancing
When deciding whether or not, you should refinance your current mortgage and replace it with a new one, there are a few important things to consider.
read more