Cost- With the Bank of Canada's policy rate down to 2.25% from its 5.0% peak, most variable-rate borrowers on adjustable-payment mortgages have moved well clear of their original trigger rate.
- Borrowers on fixed-payment variable mortgages (where the payment doesn't automatically rise with rate) were the ones most exposed during the hiking cycle, and some are still working through negative amortization from that period.
- New variable-rate mortgages originated more recently are starting from today's lower rate environment, giving them more room before a trigger rate would become relevant again.
What a trigger rate actually is
On a fixed-payment variable mortgage — where your payment amount stays the same even as your rate floats — the interest portion of your fixed payment grows as rates rise. The trigger rate is the point at which your entire payment only covers interest, with nothing going to principal; rise past it and, without a mortgage feature allowing negative amortization, your payment would need to increase.
Where things stand at today's rates
With the policy rate down to 2.25% from its 5.0% peak (see our rate update), most variable-rate borrowers have moved well clear of the trigger rate territory that was a real concern in 2022-2023 — the gap between current rates and most borrowers' original trigger rate has widened substantially. This isn't universal, though: it depends on when a specific mortgage originated and its exact rate and amortization at that time.
Lingering effects for those who hit negative amortization
Some borrowers who did cross their trigger rate during the peak of the hiking cycle, and whose mortgage allowed negative amortization (payments not covering full interest, adding the shortfall to the principal balance), are still working through a somewhat larger outstanding balance than their original amortization schedule projected — even as current rates have improved. If this applies to you, review your current amortization and balance directly with your lender rather than assuming the situation has fully self-corrected just because rates have fallen.
Check your current numbers on the mortgage payment calculator.
- Bank of Canada — accessed September 2026