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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