Fixed vs. variable: Homeowners weigh options after Bank of Canada keeps rate unchanged

The Bank of Canada’s decision to keep interest rates unchanged on Wednesday came as no surprise to the mortgage industry – but it leaves plenty of questions for borrowers weighing up the best choice on interest rates.

The central bank’s announcement kept the policy rate at 2.25%, meaning variable rates and home equity lines of credit (HELOCs) will remain unchanged. Meanwhile, five-year Government of Canada bond yields have ticked upward since last week, likely increasing fixed rates.

The Bank’s statement on Wednesday heavily referenced the ongoing geopolitical strife caused by the war in Iran, which has sent financial markets into a tailspin and spiked the price of oil over the past several weeks.

That turmoil showed little sign of easing on Thursday morning as US president Donald Trump warned the ongoing blockade of the Strait of Hormuz could last months, and the central bank clearly remains worried about inflation if the oil crisis risks inflaming prices further.

Governor Tiff Macklem struck a careful tone in remarks at Wednesday’s press conference, signalling that the policy rate will likely remain steady for now but could change depending on the crisis in the Middle East.

Homeowners and homebuyers, then, are left in the lurch as they ponder the interest rate path ahead and wait to see what could lie in store for borrowing costs when the time comes to purchase a home or renew their mortgage.

“Among homeowners, there’s a good number of them that are expecting to see their payments rise,” Steve Ng, a senior district manager with TD, told Canadian Mortgage Professional. According to recent TD research, “more than half of them say that because of that, they’re going to have to cut back on things like day-to-day spending,” he said.

Borrowers’ risk appetite remains central to decisions

Each borrower’s specific circumstances are different, but Ng said he’s still seeing a decisive shift toward fixed-rate mortgages in the current environment.

“If they’re looking for comfort, then fixed rates are where it’s at,” he said. “Variable rates may suit some, but for the most part, more and more Canadians now are moving to those fixed rates because of that uncertainty going forward.”

Three- and five-year terms are especially attractive to borrowers at present, he said, because they allow peace of mind during a potentially prolonged period of instability.

That mightn’t offer significant comfort for borrowers emerging from ultra-low pandemic-era mortgages who enjoyed rock-bottom rates when they bought in 2021 or early 2022.

But with most economists now expecting the Bank of Canada to sit on the sidelines for a prolonged spell (potentially through this year and 2027) could variable-rate options grow in appeal if they’re expected to remain steady?

Again, Ng said it depends on borrowers’ individual risk appetites. “Because the Bank of Canada’s approach right now is to wait and see, we could potentially see a larger disparity between variable rates and fixed rates,” he said.

“When we’ve seen that happen in the past… people start looking at their pocketbooks. Some people are willing to take that risk with variable, but to each their own. Everybody needs to assess the risk for themselves, and everybody’s situation is different.”

‘We want people to engage their advisors sooner’

Mortgage professionals have long emphasized the need for borrowers not to rest on their laurels and wait for their mortgage renewals to arrive, stressing the importance of a proactive approach to explore all options and gain a full understanding of their financial picture.

That’s even more essential in the current environment, according to Ng, with economic uncertainty showing no sign of fading anytime soon.

“We want people to engage their advisors sooner,” he said. “Human nature is always to procrastinate and to wait to see what happens. People will always hope that things will get better, but the reality is that the sooner they engage their institution, the more options they have and the less they’ll get caught off guard.

“You can still put some meaningful discussions and plans in place now, even if you don’t make a decision today. You can potentially have some backups that you can work towards.”

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!

CREA downgrades Canada home sales, price forecast for 2026

Canadian home sales in March 2026 barely budged, but the mood in the mortgage market clearly darkened.

The Canadian Real Estate Association (CREA) has downgraded its forecast for 2026 sales amid a stormy economic climate and continuing uncertainty over the housing market.

The assciation reported that transactions through MLS systems dipped just 0.1% from February, with actual activity 2.3% below a year earlier and prices still drifting lower.

A spike in oil prices late in the month stoked inflation fears, pushed up bond yields and triggered a mid‑March jump in fixed mortgage rates, just as the critical spring market approached.

CREA’s senior economist Shaun Cathcart said that combination has weighed on already fragile sentiment.

“Home sales activity remained at lower levels in March, as rising global economic uncertainty, along with a mid‑month jump in fixed mortgage rates tied to incoming higher inflation, piled on to an already shaky economic start to the year,” Cathcart said.

“2026 is still expected to see a modest amount of upward momentum in sales and a stabilization in prices as some pent‑up first‑time buyer demand enters the market, but the forecast for the year has had to be revised downward.”

Forecast cut as global shocks hit confidence

CREA now expects national home sales to rise just 1% in 2026, to about 475,000 transactions. That's down from the 5.1% growth it projected in January.

The national average price was forecast to climb 1.5% to roughly $689,000 – about $10,000 lower than CREA’s previous call – with almost no growth in British Columbia, Alberta and Ontario and modest gains elsewhere. 

Cathcart linked the downgrade directly to geopolitical turmoil.

“Unfortunately, as it pertains to the forecast, we’ve had to change that and lower it because of the situation in the Middle East and the oil shock,” he told CBC News.

He added that buyers are also watching how the U.S. and Israel’s war with Iran would filter through to global growth and interest rates, saying “these massive global disasters, really, … continue to unfold.”

Balanced market, but buyers stayed cautious

On the ground, market balance stayed relatively stable. New listings edged down 0.2% month over month in March and sat at their lowest levels since mid‑2024, helping keep the national sales‑to‑new‑listings ratio at 47.8% – comfortably within CREA’s “balanced” range.

The National Composite MLS Home Price Index fell 0.4% from February and 4.7% year over year, while the actual national average price slipped 0.8% from March 2025 to $673,084.

“While the interest rate situation has recently changed, what could be a challenge for a buyer looking for a fixed rate mortgage may also be seen as more choice and less competition for those choosing a variable rate,” said CREA chair Garry Bhaura.

“Spring tended to be a busier time of year for the housing market, even if it may not have been quite as busy as we were expecting not so long ago. For those of you not impacted by the recent jump in mortgage rates, get working with a local REALTOR® today.”

What it meant for mortgage professionals

For brokers and lenders, the March figures reinforce a story they have already been watching: demand that exists on paper, but often not in approvals.

In 2025, external shocks – then in the form of US tariff threats – had already kept a lid on activity despite lower rates.

Despite CREA’s downgrade, the association still expects modest price and sales growth in 2026 and 2027. 

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!

Toronto and Vancouver slump masks stronger housing markets across Canada

 It’s no secret that Canada’s spring housing market is off to a slow start as a host of factors – economic uncertainty, rising interest rates, affordability challenges and more – continue to weigh down the national outlook.

But while the two largest markets, Toronto and Vancouver, are facing a gloomy few months ahead, they could be overshadowing other cities where prospects are markedly better.

Home sales and prices are expected to continue sliding in the Greater Toronto Area (GTA) and Greater Vancouver Area (GVA) between now and the end of 2026, with their spiralling condo sectors likely to drive much of that decline.

Still, a new forecast by Royal LePage shows 10 of 12 major metropolitan cities are expected to see average prices tick up by January, with only Toronto and Vancouver in the red on price growth.

Some of those projected increases are noteworthy. Halifax, Winnipeg, and Regina are all expected to see average prices rise by 4%, with the Greater Montreal Area slated for 5% growth and Quebec City poised for a bumper 12% jump in prices.

Edmonton, Calgary, and Ottawa are expected to see milder growth (2.0%, 1.5%, and 2.0% respectively) with declines in Toronto and Vancouver (-4.5% and -3.5%) dragging the national average down to a modest 1.0%.

Buyers ‘looking beyond geopolitical issues’ in less pricey markets: Soper

For Royal LePage’s president and chief executive officer Phil Soper (pictured top), those contrasting fortunes highlight the absence of a truly “national” Canadian housing market and the radical divergence at play between different cities.

And while there’s been plenty of discussion in recent weeks about homebuyers stepping to the sidelines because of the economic uncertainty caused by the war in Iran, Soper told Canadian Mortgage Professional he believes those geopolitical concerns are less of a factor for homebuyers in more affordable markets outside the notoriously overpriced Toronto and Vancouver regions.

In less pricey northern Ontario markets, for instance, Soper said recent conversations with regional brokerages showed the main challenges facing homebuyers are the same as before the outbreak of the trade war last year and the Iran conflict in February: handling multiple-offer situations, improving housing inventory, and “lighting a fire” under policymakers to boost construction.

“In parts of the country where home prices are moderate, people are looking beyond the geopolitical issues – America’s war on Iran, the on-again, off-again trade threats from President Trump,” he said.

“They’re looking beyond that and saying, ‘All right, let’s get into this market. Mortgage rates are reasonable, home prices have been flat, but they’re likely to start rising again, so I should get into the market because my job’s solid.’ And we’re seeing that right across the country.”

The rosy forecast for Quebec City was spurred in part by a spectacular first quarter for the city’s housing market, where aggregate prices jumped by 10.7% in the opening three months of the year.

Single-family detached home prices hit $508,500, rising by 11.1%, a trend that Soper said reflected the lack of supply and rising demand for properties in that city.

Toronto and Vancouver still much pricier than elsewhere – but the gap is narrowing

Another trend that jumps off the page from the company’s latest market report: the price gap between the Toronto and Vancouver markets and the rest of the country is slowly narrowing thanks to falling values in those two cities and climbing prices elsewhere.

In 2022, the gap between aggregate home prices in Toronto and Montreal was around $800,000, Soper said. By the fourth quarter of last year it had dropped to $440,000 – and it fell further in 2026’s first quarter, slipping to $375,000.

Even when prices were sky-high in Toronto and Vancouver – for instance, in the period of rampant appreciation during the COVID-19 pandemic – many buyers still felt the time was right to jump into the market amid lower interest rates and higher savings trends.

But while prices have fallen in those cities, they’re still higher than in other Canadian markets and the economic uncertainty generated by the Iran war and tariff turmoil tends to be a bigger factor for buyers there than elsewhere, according to Soper.

“When people are super incented and sure that they need to get into the market, they’ll look beyond affordability challenges and leap in,” he said. “When they’re uncertain anyway and they feel that prices are stretched and too high, they’ll easily use it as an excuse to sit tight for another month or two, another quarter. And that’s what we’ve been seeing in Toronto and Vancouver for sure.”

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!

CREA downgrades Canada home sales, price forecast for 2026

Canadian home sales in March 2026 barely budged, but the mood in the mortgage market clearly darkened.

The Canadian Real Estate Association (CREA) has downgraded its forecast for 2026 sales amid a stormy economic climate and continuing uncertainty over the housing market.

The assciation reported that transactions through MLS systems dipped just 0.1% from February, with actual activity 2.3% below a year earlier and prices still drifting lower.

A spike in oil prices late in the month stoked inflation fears, pushed up bond yields and triggered a mid‑March jump in fixed mortgage rates, just as the critical spring market approached.

CREA’s senior economist Shaun Cathcart said that combination has weighed on already fragile sentiment.

“Home sales activity remained at lower levels in March, as rising global economic uncertainty, along with a mid‑month jump in fixed mortgage rates tied to incoming higher inflation, piled on to an already shaky economic start to the year,” Cathcart said.

“2026 is still expected to see a modest amount of upward momentum in sales and a stabilization in prices as some pent‑up first‑time buyer demand enters the market, but the forecast for the year has had to be revised downward.”

Forecast cut as global shocks hit confidence

CREA now expects national home sales to rise just 1% in 2026, to about 475,000 transactions. That's down from the 5.1% growth it projected in January.

The national average price was forecast to climb 1.5% to roughly $689,000 – about $10,000 lower than CREA’s previous call – with almost no growth in British Columbia, Alberta and Ontario and modest gains elsewhere. 

Cathcart linked the downgrade directly to geopolitical turmoil.

“Unfortunately, as it pertains to the forecast, we’ve had to change that and lower it because of the situation in the Middle East and the oil shock,” he told CBC News.

He added that buyers are also watching how the U.S. and Israel’s war with Iran would filter through to global growth and interest rates, saying “these massive global disasters, really, … continue to unfold.”

Balanced market, but buyers stayed cautious

On the ground, market balance stayed relatively stable. New listings edged down 0.2% month over month in March and sat at their lowest levels since mid‑2024, helping keep the national sales‑to‑new‑listings ratio at 47.8% – comfortably within CREA’s “balanced” range.

The National Composite MLS Home Price Index fell 0.4% from February and 4.7% year over year, while the actual national average price slipped 0.8% from March 2025 to $673,084.

“While the interest rate situation has recently changed, what could be a challenge for a buyer looking for a fixed rate mortgage may also be seen as more choice and less competition for those choosing a variable rate,” said CREA chair Garry Bhaura.

“Spring tended to be a busier time of year for the housing market, even if it may not have been quite as busy as we were expecting not so long ago. For those of you not impacted by the recent jump in mortgage rates, get working with a local REALTOR® today.”

What it meant for mortgage professionals

For brokers and lenders, the March figures reinforce a story they have already been watching: demand that exists on paper, but often not in approvals.

In 2025, external shocks – then in the form of US tariff threats – had already kept a lid on activity despite lower rates.

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!

Fixed vs variable mortgages: How are Canadians choosing as economic uncertainty soars?

Canadian borrowers are reassessing their mortgage choices as fixed rates climb on the back of recent bond market turbulence, prompting a fresh look at the trade-offs between fixed and variable options.

Fixed mortgage rates have been pushed higher as bond yields rise, with markets scaling back expectations for future rate cuts in both Canada and the United States. According to Ratehub, the lowest insured five-year fixed mortgage rate has risen to around 3.94%, up from 3.79% in February.

Leah Zlatkin, a licensed mortgage broker and LowestRates.ca expert, says the shifting rate environment is prompting some borrowers to reconsider where they stand.

“Most borrowers still prefer the certainty of fixed payments, especially after the sharp increases to variable rates during the Bank of Canada’s rate-hiking cycle in 2022 and 2023,” Zlatkin said. “At the same time, others are looking at the numbers and believe a variable mortgage is worth the risk given the immediate savings.”

Breaking penalties shape borrower decisions

Variable mortgages are currently available at meaningful discounts compared with many fixed options, with some borrowers securing rates close to prime minus 0.95. That pricing gap is drawing renewed interest in variable options, particularly among homeowners who plan to sell within a few years or who expect interest rates to hold steady or decline.

“In many cases, it comes down to a cost-benefit analysis,” Zlatkin said. “Some borrowers expect to sell their home within a few years, and the penalty to break a variable mortgage is typically only three months’ interest. Others believe the savings from today’s variable discount make it worth the risk compared with locking into a higher fixed rate.”

Fixed mortgages remain far more popular, with 77% of rate inquiries on at least one major comparison platform in 2025 directed toward fixed products, compared with just 8% for variable, as many borrowers continue to prioritise payment certainty, according to Ratehub.

Fixed mortgage rates are expected to rise slightly amid continued bond market volatility, driven by high government debt and various international conflicts, while variable mortgage rates are expected to remain relatively stable at least through mid-2026, according to Mortgage Sandbox.

Despite the appeal of variable discounts, Zlatkin cautioned that such products are not suitable for every borrower.

“The reality is that variable rates come with uncertainty,” she said. “Borrowers need to be comfortable with the possibility that rates could move higher again depending on how the economic environment evolves.”

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!