CostChoose variable if you can absorb payment swings and believe rates are more likely to fall than rise from here; choose fixed if payment certainty matters more to you than optimizing for the lowest expected cost. In 2026, the gap between the two has narrowed, which makes fixed a more reasonable default for risk-averse buyers than it was during the steepest part of the hiking cycle.
How close fixed and variable rates are right now
With the Bank of Canada's policy rate holding at 2.25% and fixed rates staying elevated relative to that policy rate (see our explainer on why fixed rates didn't fall as far as the policy rate), the traditional gap between fixed and variable has narrowed compared to previous points in the cycle. That narrower gap changes the math: historically, variable has tended to win over the long run partly because it started from a meaningfully lower rate — with a smaller starting gap, some of that historical edge is reduced.
When variable still makes sense
Variable remains a reasonable choice if your budget can genuinely absorb a payment increase without real strain, if you're likely to break the mortgage before your term ends (variable-rate penalties are typically three months' interest, almost always cheaper than a fixed-rate penalty — see our mortgage penalty guide), or if you specifically believe further rate cuts are more likely than increases from here.
When fixed makes more sense
Fixed is the more defensible default if payment certainty matters to your financial planning, if you're already at the edge of what your budget comfortably supports, or if you plan to stay in the mortgage for its full term without breaking it. The narrower fixed-variable gap in 2026 specifically makes the "insurance premium" of locking in a known payment cheaper than it's been in prior years.
Splitting the difference
Some lenders offer hybrid or split mortgages, dividing your loan between a fixed and variable portion under one agreement — a way to hedge without needing to commit fully to either bet. It's a smaller share of the market and not available from every lender, but worth asking your broker about if you're genuinely torn between the two.
Model both options with your actual numbers using the mortgage payment calculator.