Variable mortgage interest rises, but fixed holds strong: Rates.ca

Canadian borrowers are showing renewed interest in variable-rate mortgages, though fixed-rate products continue to dominate the market as most households prioritize payment predictability amid ongoing economic uncertainty, according to new data from Rates.ca.

The findings, drawn from Rates.ca’s mortgage quoter, show a measurable shift in borrower behaviour between 2024 and 2025, with variable-rate interest climbing although not overtaking fixed-rate demand.

According to Victor Tran, mortgage and real estate expert at Rates.ca, the uptick in variable-rate inquiries followed a series of rate reductions by the Bank of Canada throughout 2025. The central bank reduced its policy rate by 75 basis points over the course of 2025, before holding the overnight rate at 2.25% in January 2026.

The Rates.ca data show variable-rate mortgage quotes generally ranged between roughly 11% and 18% of total quotes throughout 2024. In 2025, variable-rate quotes moved into the 20% range, peaking at nearly 30%. In January 2026, variable rates accounted for just over 26% of total quotes. Fixed-rate mortgages remained above 70% of total quotes across 2024, 2025, and into early 2026.

“We’re seeing more borrowers take a closer look at variable rates than we did a year ago,” Tran said. “As the Bank of Canada lowered rates through 2025, variable mortgages became more attractive and interest picked up. Even so, most households are still opting for fixed because it offers predictability in an environment where rate direction isn’t guaranteed.”

The trend at Rates.ca broadly aligns with data from other platforms. Ratehub.ca reported that 77% of all mortgage requests on its platform from January through December 2025 were for five-year fixed-rate mortgages.

Borrowers weigh stability

Tran described the pattern as one of cautious decision-making rather than a fundamental change in risk tolerance. He noted that some borrowers who have already experienced payment increases may approach variable products with greater caution, while others – particularly those with shorter timelines or plans to move or refinance – may view variable rates as a viable option.

“For households planning to stay in their mortgage longer term, fixed still offers predictability that many are reluctant to give up,” Tran said.

Fixed rates are expected to remain relatively stable, while variable rates may hold broadly steady through mid-2026 absent a major economic shift.

As of early 2026, variable mortgage rates are tracking lower than five-year fixed rates, giving borrowers a noticeable pricing advantage, though Tran’s data suggest most Canadians are not yet acting on that spread.

The findings come as a significant share of Canadian mortgage holders face renewal decisions. Roughly 60% of Canadian mortgages are set to renew in 2025 and 2026, putting mortgage risk assessment at the forefront for a large segment of borrowers.

Housing sector in holding pattern

By late 2025, Canada’s housing market had entered what industry analysts described as a prolonged “waiting game” as buyers and sellers reacted to a combination of slower sales and cautious expectations about future interest rates. According to a report from Royal Bank of Canada Economics, home resale activity stagnated across much of the country through the fall of 2025 after a modest rate reduction failed to energize transactions.

“Canadian homebuyers are playing the waiting game in a showdown with sellers,” the report observed, noting that resales had neither grown nor shrunk significantly since midsummer. In some markets, accumulating listings allowed buyers to exert leverage, prompting price adjustments as sellers weighed whether to reduce asking prices to generate interest. This dynamic contributed to a sense of market balance rather than a clear acceleration in activity, even as borrowing costs eased.

Data from the Canadian Real Estate Association indicate national home sales softened toward the end of 2025, while the MLS® Home Price Index recorded modest declines in some regions and stable pricing in others. Inventory levels remained elevated compared with recent years, reflecting slower turnover in the resale market.

Housing affordability metrics also improved in late 2025. National Bank of Canada’s housing affordability monitor shows the share of household income required to cover mortgage payments declined for eight consecutive quarters, reaching its lowest level in nearly four years by the fourth quarter of 2025. The improvement coincided with lower borrowing costs and gradual income growth.

Despite these changes, affordability conditions remain uneven across the country. In higher-cost markets, the proportion of income required for housing expenses continues to exceed long-term historical averages. Industry data note that price adjustments have been uneven by region, with some areas experiencing greater moderation than others.

CMP

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A make-or-break moment could be looming for Canada’s housing market this summer

The US Supreme Court’s decision to strike down a large portion of Donald Trump’s tariffs last week doesn’t seem likely to change the picture much for Canada when it comes to the ongoing trade war.

But that tariff dispute, which has proven hugely impactful on the national housing market and homebuyer confidence, could face a day of reckoning by July 1.

That’s the cutoff point for review of the Canada-US-Mexico Agreement (CUSMA), a wide-ranging trade deal struck between the three North American allies that’s protected many Canadian industries and exports from the tariff wave Trump launched last year.

The current US tariffs exempt exports covered by CUSMA, meaning Canada has been spared much deeper trade pain – even if the tariffs have battered other sectors like steel, aluminum and automobile manufacturing.

Economists have long flagged the enormous significance of the looming CUSMA review, whose outcome could shape the outlook for Canada’s housing market and wider economy for the remainder of the year.

Those negotiations, and the prospect of Trump suddenly walking away from the deal, make it far more noteworthy than last week’s Supreme Court decision, according to Servus Credit Union chief economist Charles St-Arnaud (pictured top).

“We have bigger concerns coming up this summer with the review of CUSMA,” he told Canadian Mortgage Professional when asked on the possible impact of Friday’s decision. “That will be more consequential in terms of what’s going to happen with tariffs.”

Exemptions have cushioned the blow of Trump’s trade war

Canada’s economy isn’t exactly booming, and certain industries have staggered under the weight of Trump’s tariff regime.

But its condition would be far worse, St-Arnaud pointed out, if it wasn’t for the wide-ranging CUSMA exemptions the Trump administration introduced last year.

“We’re doing OK – not great,” he said. “We need to put it in terms of context. If we compare to where we thought we would have been a year ago, we’re in much better shape. But it’s still not great. It seems like the economy is really at a standstill.

“In terms of growth, in terms of domestic demand, it’s still sluggish. We’re hoping for some improvement in 2026, but it will remain kind of a modest improvement in terms of economic activity this year.”

Hopes of a Canadian housing market recovery in 2025 were dashed when Trump announced his tariff plans, plunging the economy into uncertainty and keeping would-be homebuyers on the sidelines amid fears of job losses and an economic downturn.

If the notoriously trigger-happy Trump walks away from CUSMA in the months ahead, that could cause further chaos, opening the possibility of even wider-ranging tariffs with many industries no longer protected.

Still, it’s unclear for now how likely the president would be to turn his back on those trade negotiations instead of striking a deal.

The Fraser Institute’s Steven Globerman and Jock Finlayson argued this week that recent events could play a big part in constraining Trump and boosting Canada’s chances of a good deal on CUSMA.

“The SCOTUS ruling, coupled with a recent congressional vote to revoke Trump’s emergency tariffs on Canada and disapproval of Trump’s tariffs by a majority of Americans, may strengthen Canada’s hand in the CUSMA review process,” they wrote.

“To the extent that Trump acknowledges that judicial, political and public opinion are turning against his slapdash trade protectionism, he might be more willing to engage in constructive discussions with Canada (and Mexico).”

Good outcome could boost confidence among hopeful buyers

Dominion Lending Centres (DLC) chief economist Sherry Cooper said the result of the CUSMA review could make or break the year when it comes to Canada’s housing market, with plenty of buyers waiting for some better news to emerge on the economy before making their move.

A positive for mortgage market watchers: if those negotiations go well and the outlook brightens for the Canadian economy, an uptick in activity in the second half of the year could be ahead.

“It’s not as though consumer confidence hasn’t improved,” Cooper told CMP, “and interest rates have come down. Home prices are down almost 10%. So people like first-time buyers that have been on the sidelines for four years certainly feel pent-up demand.”

But that doesn’t mean the market will suddenly spring into life if there’s a positive outcome to the trade negotiations, Cooper added, particularly with Toronto’s condominium market showing no signs of recovery.

“Toronto and British Columbia were not only hardest-hit by the tariffs, but there’s also a glut of new condominium housing in Toronto,” she said, “and that’s just going to take time to work off.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

‘We’re still in the same mess’: Why the US tariff ruling doesn’t change much for Canada

It was a ruling that grabbed headlines around the world – but the US Supreme Court’s rebuke of Donald Trump’s tariff regime isn’t one that’s likely to stir much hope in Canada of an end to ongoing trade turmoil.

That’s because while the US’ highest court deemed Trump’s tariffs illegal, its decision focused on levies introduced using the International Emergency Economic Powers Act (IEEPA), which excludes the most prominent tariffs on Canada: on steel, aluminum, lumber, and automobiles.

In short, the Canadian housing market doesn’t look likely to see any meaningful boost from the news, with the main factors weighing it down still in place.

And economists don’t see the decision spelling the end of Trump’s global tariffs. Charles St-Arnaud (pictured, top left), chief economist at Servus Credit Union, told Canadian Mortgage Professional the Supreme Court’s move probably came as no surprise to the Trump administration.

“The likelihood that it would be struck down was quite high,” he said. “So there’s a bit of relief, but we also know that most of the US administration was likely working behind the scenes to find ways to keep those tariffs on.

“I think we’re kind of in a wait-and-see situation to see what’s going to be used next to justify the tariffs, because I don’t think they’re going away anytime soon. It feels to me that the US administration is already working on going around the Supreme Court decision.”

Trump’s tariffs, introduced last year, fuelled fears of a deep recession and mass layoffs in Canada – and economic uncertainty has lingered even after a wave of exemptions for goods covered under the Canada-US-Mexico Agreement (CUSMA).

That unease isn’t likely to dissipate further after the Supreme Court’s ruling on Friday, Dominion Lending Centres (DLC) chief economist Sherry Cooper told CMP.

“This is less of a big deal than you might think because they’re going to use another authorization for tariffs as opposed to IEEPA,” Cooper said. “There’s a big debate now as to which companies will get refunds. It will no doubt be a very slow and difficult process because I’m not sure they’re keeping proper records of all of this.

“But it’s a mess. It’s a good thing for Canada in that it highlights how unnecessary this all was, but it doesn’t really change anything. He’ll use other excuses for the tariffs that are legal.”

Trump lashes out

Trump struck a combative tone on the Supreme Court decision in a Friday afternoon press conference, blasting the six justices who said his use of the IEEPA had been illegal.

He said he was using a different statute, Section 122 of the 1974 Trade Act, to impose new 10% global tariffs and hit out again at global trading partners he said had “ripped off” the US in previous years.

Few experts see harmony suddenly breaking out between the US and other countries, including Canada, in the months ahead. “Unfortunately, we’re still in the same mess we’ve been in for almost the last year,” Cooper said.

CUSMA review looms amid new headwinds

The decision presents a new twist ahead of the upcoming CUSMA review, which must be completed by July 1.

The outcome of those talks will likely prove pivotal, Cooper said, in determining the outlook for Canada’s housing market for the rest of the year.

“The uncertainty and the fact that we don’t know what’s going to happen to CUSMA is what’s weighing on the housing market. It’s not prices. It’s not interest rates,” Cooper said.

“If, all of a sudden, the free trade agreement between Canada and the US no longer existed, the 90% of exports that are not subject to tariffs because of CUSMA suddenly then would be. And that’s a very scary prospect for the economy.”

But it’s not a decision the US would likely take lightly. “That doesn’t mean the US will walk away from CUSMA,” she added. “Ninety-three percent [93%] of all aluminum imported by the United States comes from Canada. They can’t do without that – at least, not immediately.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

‘A slow grind’: Mortgage arrears far from crisis point despite renewal wave

Mortgage delinquencies are on the up across many parts of Canada, with Ontario emerging as one of the hardest-hit provinces in terms of missed payments and affordability strain.

But while that trend is expected to continue in the year ahead as more mortgages come up for renewal, experts have stopped short of predicting a huge escalation – and not many mortgage industry members expect arrears to spill into a crisis either.

That’s partly because of an often-repeated caveat to news of rising delinquencies: they remain below historical levels, and reasonably contained across the country.

And lenders’ willingness to work with their customers to identify solutions instead of watching them crash and burn will also likely play a part in limiting the damage, according to Rates.ca mortgage and real estate expert Victor Tran (pictured top).

“I think [delinquencies] will continue to increase as more homeowners renew their mortgages in the next 12 months, 24 months even. But I think it’s going to be a slow grind,” he told Canadian Mortgage Professional. “It’s not going to be a significant, drastic increase suddenly and I don’t think we’re going to see sudden mass foreclosures or power of sales.

“At the end of the day, the banks and lenders out there are in business to help homeowners out and lend them money, not to foreclose on homes.”

He pointed to a trend seen during the COVID-19 pandemic, when financial institutions stepped in with solutions for mortgage holders and other borrowers who had lost their jobs or seen payment strain.

That type of accommodation will likely play a role in the coming renewal wave, Tran said, as lenders offer ways for customers to navigate the challenges posed by higher rates and payments.

“We had payment deferrals of up to even six months, sometimes longer on exception,” he said. “So I think we’re going to continue to see that should any homeowner display financial distress and not [be able to] make mortgage payments.

“That will definitely keep the foreclosure and power of sale rates down. I think it’s going to keep down the delinquency rate as well. But I don’t think it’s a huge concern yet.”

Homeowners rolling with the punches on mortgage renewals

To date, the renewal wave has created challenging conditions for many borrowers, even if it hasn’t spiralled into a crisis yet.

Tran said he’s seeing renewing homeowners face an average monthly payment increase of between $400 and $500 a month – some more and some less, depending on the size of the loan – a not insignificant spike.

But few of those borrowers, he said, were caught completely unaware by the jump and most had a plan in place to deal with higher payments.

A recent report by Canada Mortgage and Housing Corporation (CMHC) highlighted that borrowers have proven resilient and usually sacrifice other expenditures before they fall behind on their mortgage.

That’s something Tran has seen, too. “This day was going to come. It was no surprise that the payments would be increasing sooner or later,” he said. “Even if some people do find it difficult to manage the higher mortgage payment, they start to cut other things too: less eating out, maybe one less vacation to offset some of the expenditures and allocate it towards a house instead.

“But I don’t see the number significantly jumping and mass foreclosures. I think for the most part, homeowners will be able to handle this.”

Rate relief brightens the picture for renewing borrowers

Another factor in homeowners’ favour now is the fact that interest rates have fallen significantly during the past two years, with both fixed and variable rates sliding compared with where they sat in 2024.

That means while borrowers are seeing their payments increase, the climb hasn’t been as bad as first feared when the Bank of Canada hiked interest rates in 2022 and 2023.

“Everyone is renewing to a higher rate and everyone’s facing higher payments, but certainly not as much as what was forecast a few years ago,” Tran reflected. “And I think the rates will probably hover around the same level for the next little while.

“There are definitely some bumps in the road with fixed rates – it went down, it went up – but for the most part, it’s been around the same as what we’ve seen now for the past 12 months. So I think it’s going to remain pretty flat and stable for the remainder of the year.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Why Canada's housing market remained in a deep chill in January

Home prices are sliding across many parts of Canada, but that trend still wasn’t enough to stoke the national housing market into life at the beginning of this year.

Sales slipped by 5.8% last month compared with December, the Canadian Real Estate Association (CREA) said on Wednesday, as the MLS Home Price Index (HPI) posted a 4.9% year-over-year decline.

That marked a gloomy start to 2026 for sellers hoping to get top dollar for their listings, but better news for would-be homebuyers on the margins of the market.

Still, plenty of those potential buyers aren’t biting, sitting on the sidelines despite momentum finally swinging away from sellers in recent months.

CREA said overall homebuying activity was curtailed by punishing weather conditions, especially in Ontario.

With the Greater Golden Horseshoe and Southwestern Ontario leading the national slump, the story was “probably more about a historic winter storm than a downshift in demand,” according to the association’s senior economist Shaun Cathcart.

Anne-Elise Cugliari Allegritti, vice president, research and communications at real estate giant Royal LePage, told Canadian Mortgage Professional buyers and sellers may have had drastically different priorities at the beginning of the year, partly due to the unusually severe winter in parts of the country.

That makes it difficult, she said, to gauge whether the sluggish start to the year was a one-off or a sign of further cooldowns ahead.

“Where is a seller sitting in January?” she said. “For a seller that maybe took their home off the market before Christmas because they thought ‘I’ll take a break over the holidays,’ the New Year is a new opportunity to get back into it. They want to move on with their selling plans, probably so they can move on with their buying plans.

“And they’re sort of in this position: ‘I’m ready to go.’ A buyer, on the other hand, sees four, six, 10 inches of snow on the ground and might say, ‘I can wait until next month to start shopping again.’”

Other factors hindering the housing market

But while extreme weather likely had a part in the slower pace of January activity, other longer-lasting trends are also at play – including the fact that prices in many markets, despite their recent decline, are still far too high for the average first-time buyer.

And even those who can finally afford a home might be hesitant to take the plunge either because they think prices will fall further, or due to concern about the direction of the economy.

“Every buyer wants to know that they’ve paid the lowest possible price that they can, just as a seller hopes that they’re getting the most that they possibly can for their home,” Cugliari Allegritti said.

“But I think what’s holding people back right now, besides this relentless winter that we’re experiencing, is still a bit of unease, a lot of uncertainty about our economic future.”

No sign of a rush to the market as prices continue to cool

Another bleak month for Canadian home sales also looks likely to cement the notion that prices aren’t set to climb anytime soon, another factor that could convince buyers it’s better to wait in hope of lower prices down the line.

“I don’t think there’s a real urgency or fear that prices are going to go up,” Cugliari Allegritti said. “So for buyers that are looking around, if they’re not desperate to move or in a situation where they have to start a new job by X date and they have to be in a new home, whether they buy this month or two months from now isn’t going to make a massive difference.”

Buyers, especially those purchasing for the first time, have had a hard time keeping up with rampant price appreciation in Canada’s housing market over the past decade, especially during the COVID-19 pandemic when frantic bidding wars sent prices skyrocketing.

Now, even if the numbers show those buyers aren’t flooding the market, an improving affordability outlook for non-homeowners is a positive development, Cugliari Allegritti said.

“I think what’s positive that we can take away from this is that affordability and opportunity are continuing to improve,” she said. “And that’s certainly going to be welcome news for younger Canadians and for first-time buyers.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!