Are Trigger Rates Still a Risk in 2026?
Are trigger rates still a risk in 2026? With prime at 4.45% and most 2020–2022 variable mortgages carrying triggers near 5% to 6.5%, few borrowers are close.
Mostly not, for now. The Bank of Canada has held its policy rate at 2.25% since October 2025, putting prime at 4.45%. A fixed-payment variable mortgage set up in 2021 at prime minus 1% (about 1.45% then) with a $2,000 payment on $500,000 has a trigger rate near 4.8%. At today's contract rate of roughly 3.45%, that borrower is paying down principal comfortably. The 2022–2023 spike to a 7.2% prime pushed hundreds of thousands past trigger; the subsequent cuts reversed it. The risk returns if prime rises 1.5 to 2 points. The more immediate issue for the 2021 cohort is renewal in 2026 at rates two to three points above the original.
Figures come from the CostToClose trigger rate calculator.
Where trigger rates sit today
| Mortgage set up | Original rate | Payment on $500,000 | Trigger rate (approx.) | Today's contract rate (prime − 1%) | Room |
|---|---|---|---|---|---|
| 2021, prime − 1.0% | 1.45% | $1,987 | ≈ 4.8% | 3.45% | 1.3 points |
| 2022 (spring), prime − 0.9% | 2.30% | $2,190 | ≈ 5.3% | 3.55% | 1.8 points |
| 2024, prime − 0.8% | 6.40% → payment set high | $3,319 | ≈ 8.1% | 3.65% | 4.5 points |
| 2026, prime − 0.9% | 3.55% | $2,510 | ≈ 6.1% | 3.55% | 2.6 points |
Figures computed using the CostToClose calculator, 14 September 2026. Trigger rates rise as balances fall, so borrowers several years in have more room than shown.
Who is exposed
- Borrowers who took fixed-payment variables in 2020–2021 at rates below 1.5%, who have not renewed yet and have not increased payments. Their trigger rates are the lowest in the market.
- Anyone whose lender allowed negative amortization through 2023 and has since reset the payment at renewal. They are no longer near trigger but are paying materially more.
The 2026 renewal cohort
Five-year terms from 2021 mature through 2026. A $450,000 mortgage at 1.89% renewing at 4.49% on a 20-year remaining amortization goes from $1,882 to $2,369 a month. Borrowers who spent 2022–2023 in negative amortization renew with a larger balance and a longer re-amortization. See Mortgage renewal: why the first offer isn't best.
What to do
- Look up your trigger rate on your lender's statement or online banking.
- If it is within 1.5 points of your current rate, raise the payment voluntarily now; it is cheaper than a forced increase later.
- At renewal, decide fixed vs variable on today's numbers, not 2022's. See Fixed vs variable: how to decide.
Frequently asked questions
What is my trigger rate?
Roughly your annual payments divided by your balance. Your lender's statement usually shows it.
Is prime rate going up in 2026?
The Bank of Canada has held at 2.25% through September 2026 and has not signalled increases. Forecasts are not facts; the calculator lets you test any rate.
How far would prime need to rise for trigger rates to matter?
About 1.5 to 2 points for the 2021 cohort still on original payments; more for everyone else.
What happens at renewal after negative amortization?
The larger balance is re-amortized over the remaining years at the new rate; the payment rises accordingly.
Should I switch to fixed to avoid trigger risk?
Only if you cannot carry a payment increase. Converting locks in a rate above the variable; raising the payment voluntarily achieves the same protection without giving up the lower rate.
Sources
- Bank of Canada, policy interest rate (2.25%, 2 September 2026); prime rate — checked 14 Sept 2026
- Financial Consumer Agency of Canada, trigger rates on variable-rate mortgages with fixed payments — checked 14 Sept 2026
- Office of the Superintendent of Financial Institutions, capital treatment of negatively amortizing mortgages — checked 14 Sept 2026
This is general information, checked against the sources listed on the date shown. It is not legal, tax, or mortgage advice. Rules change, so confirm with your lender or the government office concerned.