If you’ve ever stared at mortgage options and felt your brain do backflips, you’re in good company. It’s an interesting time to be renewing a mortgage right now: rates have come down a bunch since the pain we’ve seen over the past couple years, but many economists still believe they have more room to fall. So, what’s a person to do? One of the most important choices you’ll make is: fixed rate or variable rate? Should you lock in affixed rate and know exactly what you’ll pay every month, or go variable and hope that rates keep dropping? Let’s look at some of the factors that influence that choice.

What’s Going On With Rates Right Now?

The Bank of Canada is currently sitting on a 2.75% policy rate, and bond yields are some of the lowest we’ve seen since 2022. That means both fixed and variable mortgages are way cheaper than they were a year ago, but fixed rates still carry a small premium.

Five-year fixed rate mortgage: Currently averaging around 3.7–3.8% today

Five-year variable: Currently averaging about 3.9–4.0% today

So yes, both are down, but fixed is still a touch higher than variable.

Why You Might Love a Fixed Rate Mortgage

• Total Peace of Mind. No surprises. Your mortgage payment is the same for the whole term, which is great news if budgeting feels like juggling flaming torches.
• Rate-Hike Insurance. Sure, the market’s betting on cuts in 2025. But central banks can ghost those predictions in a heartbeat. With fixed, you’re insulated if bond yields suddenly spike.
• Brain-Off Mode. If you hate obsessively refreshing financial headlines, fixed is your ticket to “I don’t have to think about this again for five years.”

Why Fixed Isn’t Perfect

• You Pay Up Front. Certainty comes with a price (nothing is free in this world, is it?): fixed rates usually sit a bit above variable rates. That tiny extra percentage can add up to real dollars over a 25- or 30-year amortization, especially if rates end up dropping later on.
• You Miss Out on Cuts. If the Bank of Canada does slash rates, variable borrowers see instant wins on their monthly bill. Fixed borrowers? No luck; you’ll be sitting and watching from the sidelines.
• Breaking Is Painful. Want to refinance or sell before your term is up? Fixed mortgages often come with hefty penalties—sometimes three months’ interest or more.

What the Crystal Ball Says

Most economists see another 0.5% or so shaving off fixed rates by the end of 2025, while variable rates could slip into the low-3% club by 2026. So if you’re a “what goes down must stay down” believer, variable could be a good choice right now. But remember: rates can go up, too. Anything is possible in the current economic environment.

So…What’s the Move?

Go Fixed if you’re all about certainty. If you’re good to pay a little extra to avoid unexpected spikes and like knowing your payment won’t change, this is a good move.

Go Variable if you can stomach some swings, love the idea of immediate savings when rates drop, and don’t mind a bit of payment variability.

Wrapping it Up

At the end of the day, it boils down to your comfort level. Are you the kind of person who sleeps better knowing the rate is locked? Or do you get a rush rolling the dice and watching the market’s dips translate into lower payments? Whichever way you lean, you’re making an informed choice.

Go forth and mortgage wisely!