What can mortgage borrowers expect in 2026?

1 - The variable-rate rollercoaster is over – for now

2026 will usher in a long-awaited era of stability for variable mortgage rates; barring any economic surprises, the Bank of Canada has taken a rate-hold stance, and has signalled it will remain for the foreseeable future. In both its October and December rate announcements, the Bank’s Governing Council emphasized they feel the current policy rate is “about right” to support economic conditions, which continue to adapt to the evolving trade landscape. 

Surprisingly strong GDP and labour numbers at the end of the year also show there’s little need for the Bank to heap on additional stimulus at this time – and won’t need to in the year to come, should the economy perform as the Bank has forecasted. Overall, the Bank expects inflation — a key pillar of its decision making – to remain close to its 2% target in 2026, before trending upward at year’s end as the economy strengthens, which may open the door to a rate increase in early 2027. 

Of course, unpredictable factors remain. A surprise slew of new tariffs, for example, or the failure to renegotiate the USCMA trade agreement this summer would certainly plunge the Canadian economy back into uncertainty and force the central bank to reverse course. 

But in today’s volatile marketplace, the Bank’s language is about as steadfast as you can get - and variable-rate borrowers have been through their share of change since 2020, when the sub-1% deals available during the pandemic gave way to one of the most aggressive central bank hiking cycles in history. Borrowers only started to feel relief in the latter half of 2024, when tariff pressures compelled the Bank to ease borrowing costs. That leads us to today; nine cumulative rate cuts later, and that benchmark rate has been shaved by more than half to a much more tolerable 2.25%, and a prime rate of 4.45% – comparably good borrowing conditions that are likely to stick around.

2 - Variable rates will grow in popularity as fixed face volatility

With a rate hold now firmly in place, the best variable mortgage rates in Canada are likely to stay below 4% – and, for the first time in three years, they’re priced better than fixed mortgage rates. 

While the best fixed-rate options are still within 50 basis points of market-leading variable rates, this spread can widen fast. Much of this will be due to continued market volatility in 2026, and the impact on bond yields, which underpin fixed-rate pricing. While it’s hard to forecast with precision where yields will trend, there’s a plethora of factors that could push them up – stronger-than-expected Canadian and US economies, a divided Federal Reserve, and AI bubble fears, to name a few. 

As we’ve seen in the past, borrowers gravitate towards variable rates when fixed options are higher, despite their inherent built-in risk. Over the course of 2025, requests for variable-rate mortgages made up 11.5% of all inquiries on Ratehub.ca, compared to 7% in 2025 – an increase of 25.7% year over year. The shift became apparent in August, when the likelihood rose that the Bank would again start cutting rates.

3 - Fixed-rate borrowers will pay 26% more when renewing in 2026

In the latter half of 2023 and early 2024, mortgage market watchers – including the Bank of Canada – sounded the alarm on the viability of mortgage renewals this year and next. With rates sharply higher than they were in 2020 and 2021 – when many of today’s renewing five-year terms were taken out – there was concern that a great number of borrowers would face payment shock when renewing, leading to a wave of mortgage defaults.

Fortunately, this hasn’t materialized as feared. Lower mortgage rates have taken the edge off for borrowers; while still renewing into higher payments, they're more manageable, especially when combined with the fact that renewing borrowers have paid off more of their mortgages, and have built up greater equity. 

Also read: Ratehub’s Mortgage Renewal Guide

According to the Canada Mortgage and Housing Corporation (CMHC), 1.15 million mortgage holders will renew in 2026, with another 940,000 slated for 2027. What might their mortgage payments look like?

According to calculations from Ratehub.ca, fixed rate borrowers will face the largest payment increase at renewal time, rising by 25%. 

This is based on a home purchase price of $607,280*, 10% down payment, five-year term, and 25-year amortization. Assuming our borrower took out their mortgage at 1.39% in December 2020, they’ve since had monthly payments of $2,224. Renewing this year at today’s lowest rate of 3.94%, and with a reduced mortgage balance of  $465,843, their new monthly payment will be $2,800 – a difference of $576 more per month, or $6,912 annually.

4 - Renewing variable borrowers will pay 4% more

It’s a more manageable scenario for variable-rate borrowers, though, as those with adjustable-rate loans have already absorbed the increase. Our calculations find these borrowers will see a 4% jump in monthly payments, based on an original rate of 0.99% and payment of $2,121. By December 2025, this same borrower’s rate would have increased to 2.99% – taking into account the Bank of Canada’s respective hiking and cutting cycles since 2020**– and their payment to $2,690.

Now, when renewing into today’s best five-year variable option of 3.45%, with a mortgage balance of $485,535, that monthly payment will rise to $2,797 – $107 more monthly, and $1,284 per year.

*average home price in Canada as of December 2020, CREA
**after 10 rate hikes ranging from 25 to 100 bps between March 2022 to July 2023, subsequently followed by 9 rate cuts ranging from 25 to 50 bps between June 2024 to October 2025.

Want to crunch how your own payments may change at renewal time? Check out Ratehub’s Mortgage Renewal Calculator.

5 - Zero rate relief means stagnant home sales

Canada’s housing market underperformed expectations in 2025; while real estate experts initially called for a rate-cut fuelled recovery, US tariff threats and market upheaval threw many buyers into decision paralysis. As a result, inventory has steadily built up in many of Canada’s biggest real estate centres, tilting conditions firmly in favour of buyers.

While sales started to pick up slightly in the latter half of the year, home prices have yet to reheat, though remain well above incomes in most big markets. With the Bank of Canada resuming a rate hold, there’s zero rate relief on the horizon – and that will do little to stoke demand. However, for motivated buyers, ample choice and bottomed-out mortgage rates provide a great opportunity to get into the market now, which could materialize into a small post-holiday bump in activity. 

Also read:

• Bank of Canada holds target rate at 2.25% in December announcement
• Variable vs. fixed mortgage rates: Which is right for you?
• The ultimate mortgage renewal guide
• Your guide to buying a home