Ratehub.ca Forecasts Era of Stability for Canadian Mortgage Rates in 2026
Amid global economic turbulence and political uncertainties, Canadian homebuyers can anticipate a period of relative calm on the mortgage front in 2026, according to a leading financial expert. Penelope Graham, a mortgage specialist at Ratehub.ca, predicts that borrowing costs will remain largely unchanged this year, marking what she describes as "a long-awaited era of stability for variable mortgage rates."
Bank of Canada's Rate-Hold Stance to Continue
Graham emphasizes that the Bank of Canada has firmly adopted a rate-hold position, signaling that this policy will persist for the foreseeable future. "The Bank of Canada has taken a rate-hold stance, and has signalled it will remain for the foreseeable future," she stated in a recent interview. This outlook is bolstered by surprisingly robust GDP and labour market figures from late 2025, which indicate little immediate need for additional monetary stimulus.
The central bank expects inflation to hover near its two percent target throughout most of 2026, potentially trending upward only as the economy gains strength toward year's end. This scenario could pave the way for a possible rate increase in early 2027, but for now, stability reigns supreme.
Variable Mortgages Gain Appeal Over Fixed Rates
A significant shift is underway in the mortgage landscape, with variable-rate products poised to grow in popularity. For the first time in three years, variable mortgage rates have dipped below fixed rates, creating an attractive opportunity for borrowers. The lowest available five-year variable rate in Canada currently stands at 3.45 percent, compared to 3.94 percent for fixed rates—a difference of 49 basis points that may widen further.
Graham explains that several market factors could keep bond yields—and consequently fixed mortgage rates—elevated throughout the new year. "While fixed mortgage rates always account for the lion's share of the market, borrowers increasingly turn to variable options when the price is right—a dynamic that will play out in 2026," she noted.
Real-World Impact on Homeowners
The financial implications of this rate environment are substantial for Canadian homeowners. Consider a hypothetical scenario: a homeowner who purchased a $607,280 property in December 2020 with a 10 percent down payment and a five-year fixed rate of 1.39 percent would have faced monthly payments of $2,224. Upon renewal in December 2025 at a fixed rate of 3.94 percent, their monthly payment would jump to $2,800—a 26 percent increase amounting to $6,912 annually.
In contrast, a variable-rate borrower with a similar property would have started with a 0.99 percent rate and monthly payments of $2,121. Renewing at the current variable rate of 3.45 percent would result in payments of $2,690 monthly—just a four percent increase or $1,284 more per year compared to their previous mortgage.
Favourable Conditions for Prospective Buyers
Graham concludes that current market conditions present advantages for buyers. "We're not seeing bidding war situations because the supply is sufficient. The market conditions are much more balanced, or even favouring buyers in some instances," she observed. With interest rates likely at their lowest point for the near future, this stability may provide the confidence needed for many Canadians to proceed with home purchases or refinancing decisions.
This analysis from Ratehub.ca offers a reassuring perspective for Canadians navigating the complex terrain of real estate financing, suggesting that 2026 may bring welcome predictability to mortgage markets despite broader economic uncertainties.
