Okay, so you’re probably wondering what’s happening with mortgage rates right now. After a few years of ups and downs, the Bank of Canada decided to keep its key policy rate exactly where it was in January 2026. That means things are looking pretty stable for now, but don’t let that fool you into thinking the decisions are easy.

Here’s the thing: while we might not see massive rate cuts this year, there’s still plenty to think about when you’re choosing between a variable or fixed mortgage. Especially with the spring housing market just around the corner, you’ve got some important choices to make for your home in Brampton, Mississauga, or wherever you are in Ontario.

Table of Contents

1. The Current Rate Reality: What the Bank of Canada is Doing
2. What’s the Forecast? Economists Weigh In
3. Variable Rates: The Flexibility Play
4. Fixed Rates: The Security Blanket
5. Making Your Move: Questions to Ask Yourself

Key Takeaways

• BoC Holds Steady: The Bank of Canada kept its policy rate at 2.25% in January 2026, after earlier cuts, signaling a period of stability for much of this year.
• Rate Movement Unlikely: Most experts don’t expect big mortgage rate drops in 2026. In fact, some are even talking about small increases late this year or into 2027.
• Housing Market Recovery: Sales are slowly picking up, especially in places like Ontario, but overall demand is still below historical norms.
• Variable vs. Fixed Today: As of late February 2026, a 5-year high-ratio fixed rate is around 3.69%, while a similar variable rate is closer to 3.35%.

The Current Rate Reality: What the Bank of Canada is Doing

Let’s talk about the big picture first. The Bank of Canada, our central bank, hit the brakes in January 2026, deciding to hold its policy interest rate at 2.25%. This wasn’t a huge surprise, especially after they spent 2024 and 2025 bringing rates down a bit. What does that “policy rate” actually mean for you? Well, it’s the benchmark that influences the prime rate, which directly impacts your variable rate mortgage.

So, here’s the deal right now: you’re looking at a pretty stable environment, at least for the immediate future. As of February 25, 2026, if you’re looking for a high-ratio mortgage (that’s when you have less than 20% down payment), the best 5-year fixed rate is sitting around 3.69%. But if you’re leaning towards variable, you could snag a 5-year variable rate closer to 3.35%. That difference might seem small, but it adds up quickly on a big mortgage.

For example, on a $500,000 mortgage in Brampton, that 0.34% difference means real money every month. We’re talking hundreds of dollars over a year. That’s why this decision is so important.

What’s the Forecast? Economists Weigh In

You’re probably wondering, “Okay, so rates are stable now, but what about tomorrow?” Good question. Most economists and the big banks are pretty much in agreement: don’t expect a parade of rate cuts this year. We’re in a holding pattern, and significant declines in mortgage rates are just not on the cards for 2026. Some smart folks are even suggesting we might see some modest bumps upwards towards the end of 2026 or into 2027. It’s not a prediction of doom, but it’s certainly a word of caution.

And what about the housing market itself? We’re seeing a slow, steady recovery. Places like Ontario and British Columbia are showing some life in sales, which is good news if you’re looking to sell or buy. But let’s be real, overall demand isn’t back to its pre-pandemic frenzy. It’s still below what we’d call historical averages. Plus, high construction costs and that weaker demand mean fewer new homes are being built, a trend that could continue for a few years. So, while things are picking up, it’s not a runaway train.

Variable Rates: The Flexibility Play

So, you’re looking at that 3.35% variable rate and thinking, “That’s lower, I like lower!” And you’re right, it is. The big appeal of a variable rate mortgage is that your interest rate moves with the Bank of Canada’s policy rate. If the BoC decides to cut rates, your payments go down. That’s a nice thought, isn’t it?

But here’s the flip side: if the BoC decides to hike rates, even modestly, your payments will go up. We’ve seen that happen before, and it can be a bit of a shock to the budget. You need to have a bit of a buffer, some extra room in your monthly finances, to absorb those potential increases. It’s not about being a gambler, it’s about being prepared.

This option is often best for folks who are comfortable with a bit of uncertainty, have a stable income, and maybe a bit of a financial cushion. If you’re a first-time buyer in Oakville with a tight budget, you might want to think twice before jumping solely on the lowest rate. But if you’re a seasoned homeowner in Mississauga with healthy savings, the variable rate could save you a good chunk of change over time, especially if rates stay flat or dip slightly.

Fixed Rates: The Security Blanket

Then you’ve got the fixed rate, currently around 3.69% for a 5-year high-ratio mortgage. The appeal here is pure peace of mind. Your interest rate, and therefore your mortgage payment, stays the same for the entire term, usually five years. You know exactly what you’re paying every single month, no surprises. That makes budgeting a whole lot simpler.

The downside? You’re paying a bit more upfront compared to the current variable rate. And if rates were to drop significantly, you wouldn’t benefit from those lower payments until your term is up. You’re essentially paying a premium for that certainty. It’s like buying insurance against rate hikes.

So what does this actually mean for you? If you’re someone who values predictability above all else, if you’re on a strict budget, or if the thought of your mortgage payment fluctuating gives you sleepless nights, a fixed rate is probably your best bet. New homeowners in Brampton, especially those stretching their budget to get into the market, often find the stability of a fixed rate invaluable. You lock it in, and you don’t have to think about it for five years.

Making Your Move: Questions to Ask Yourself

Alright, so we’ve broken down the options. Variable vs. fixed mortgage Canada 2026: it’s not a one-size-fits-all answer. This isn’t just about picking the lowest number; it’s about picking the right fit for your life, your budget, and your comfort level.

Ask yourself these questions:

• How comfortable are you with your mortgage payment potentially changing?
• Do you have extra room in your budget to handle a rate increase, even a small one?
• Are you planning to sell your home or make a big financial change within the next few years?
• How important is absolute predictability for your monthly expenses?

The Canadian mortgage rates forecast points to stability, but stability isn’t the same as certainty. The Bank of Canada interest rate outlook suggests we’re not seeing big cuts, and maybe even some small increases down the road. That makes your choice even more important.

Bottom line: this is a big financial decision. You don’t have to figure it out alone. As a brokerage in Brampton since 1988, with 40+ lender relationships, we’ve seen every market condition you can imagine. We can help you look at your specific situation, crunch the numbers, and find the mortgage solution that makes the most sense for you.

Got questions? Contact us today or call 905-455-5005. No pressure, no obligation.

About the Author: Aman Harish

Aman Harish is a Co-Owner and Mortgage Broker at Canadian Mortgage Services. With over 14 years of experience in the Canadian lending landscape, Aman specializes in helping homeowners and buyers develop proactive renewal strategies and optimize their debt structure in challenging economic climates. His commitment is to ensuring clients not only secure the best rates but also build long-term financial resilience.