Current Canadian mortgage rates (August 2026)
Following the Bank of Canada's sixth consecutive policy rate hold at 2.25% on July 15, 2026, lender prime rates remained unchanged at approximately 4.45%. This stability impacts variable-rate mortgages directly, while fixed rates continue to be influenced by government bond yields and lender pricing.
Recent public market data from nesto.ca shows:
| Mortgage Type | Best Rate | National Average |
|---|---|---|
| 5-year fixed (insured) | 4.09% | 4.92% |
| 5-year variable (insured) | 3.40% | 4.17% |
| 3-year fixed (insured) | 4.14% | 4.87% |
| 3-year variable (insured) | 3.60% | 5.00% |
Rates vary by lender, credit score, down payment, and mortgage insurance status. These figures represent publicly advertised rates, not guaranteed offers.
Fixed vs Variable: How they respond to Bank of Canada changes
Mortgage rates move directly with lender prime rates, which typically follow BoC overnight-rate decisions. With BoC holding at 2.25%, prime rates stay around 4.45%, keeping variable mortgages stable.
Determined by government bond yields and lender funding costs. They can fluctuate even when the BoC holds steady, especially ahead of renewals.
~60% of renewing borrowers face payment changes. 5-year fixed renewals average 15-20% increases; variable holders may see 5-7% decreases.
Who benefits from each mortgage type in 2026?
Variable-rate mortgages are better for:
- Borrowers who plan to stay in their current term or sell before rates rise
- Those comfortable with payment volatility and budget flexibility
- Investors who want interest deduction on rental mortgages
- Short-term holders expecting potential rate declines
Fixed-rate mortgages are better for:
- Borrowers who value payment certainty for budgeting and planning
- Renewal holders facing payment shock (e.g., from rates below 2%)
- Those uncomfortable with potential rate increases
- Long-term homeowners who won't refinance for the full term
Renewal payment outlook for 2026
Bank of Canada staff analysis shows significant impacts for renewing borrowers:
| Mortgage Type | 2026 Payment Change | Mortgage Share |
|---|---|---|
| 5-year fixed renewals | +15-20% increase | ~40% of all mortgages |
| Variable-rate, variable payment | -5-7% decrease | Growing segment |
| Short-term fixed (<5 years) | Decreases likely | Various |
| All renewals (2025-2026) | ~60% see increases | ~1/3 of all holders |
Most 5-year fixed renewals in 2026 originated during 2020-2021 when rates were below 2%, creating the largest payment jumps in Canadian mortgage history.
Key factors to consider before choosing
- Payment tolerance – Can you handle monthly payment fluctuations, or do you need stability?
- Timeline – How long will you keep the mortgage before selling, refinancing, or renewing?
- Market outlook – With BoC holding at 2.25%, rates may stay stable, but bond yields could pressure fixed rates higher.
- Penalties – Review break-up fees for early termination. Fixed rates often have higher penalties.
- Flexibility – Look for convertibility clauses and prepayment options to adapt if conditions change.
Use our mortgage payment calculator to model different rate scenarios with your exact balance, amortization, and down payment.
Rate hold strategies for renewal borrowers
Now is the time to lock in your renewal strategy:
- Get a rate hold – Most lenders offer 90-120 day holds before your maturity date
- Compare all options – Look at 2, 3, 5-year fixed and variable rates, not just your current term
- Check stress-test rules – OSFI exempts uninsured switches from stress test if renewal terms don't increase
- Negotiate early – Starting the conversation 60+ days before maturity gives you leverage
Compare your 2026 renewal options today
Don't risk missing better rates. RateShop helps Canadian borrowers review current mortgage options, estimate payment changes, and find competitive renewal offers before your maturity date.
Compare my renewal optionsRate disclaimer
Rates shown are current market averages and examples only. Actual mortgage rates depend on lender criteria, borrower qualifications, property details, mortgage purpose, down payment or equity, insurance status, amortization, documentation, and lender-specific rules. This article does not provide personalized mortgage, legal, tax, or financial advice and does not guarantee approval, savings, or a specific rate. Rates change daily—verify current offers directly with lenders.
Frequently asked questions
Are variable rates still lower than fixed rates in Canada?
Yes, as of August 2026, 5-year variable rates (3.40-4.17%) are typically below 5-year fixed rates (4.09-4.92%). However, variable rates can rise if the BoC hikes, while fixed rates provide payment certainty.
How does prime rate affect my variable mortgage?
Your variable rate is typically prime minus a spread (e.g., prime minus 1.05% = 3.40% if prime is 4.45%). When the Bank of Canada changes the policy rate, lender prime rates adjust, which directly impacts your variable mortgage rate.
Should I lock in a fixed rate now?
If you have a 5-year fixed renewal coming from pandemic-era rates below 2%, locking in now may offer better protection than waiting for potential rate movements. A rate hold can secure your position while you shop around.
What if my variable rate is higher than fixed?
The 'upside-down' market (where variable > fixed) can occur during rapid rate changes. If this happens to you, some lenders offer 'rate hold' options to switch to a fixed rate without penalty.
Can I refinance to a different term type?
Yes. Many lenders allow you to switch from fixed to variable or change your term length when you renew, sometimes with minimal penalty. Review your convertibility clause and speak with a broker to understand your options.
Sources used
- Bank of Canada: Policy interest rate
- Bank of Canada: Maintains the policy rate at 2¼% — July 15, 2026
- Bank of Canada: How will mortgage payments change at renewal? (updated analysis)
- nesto.ca: Current mortgage rates Canada
- Ratehub.ca: Best mortgage rates Canada
- WOWA.ca: Canada mortgage rates
- RBC Royal Bank: Bank of Canada interest rate update