The Canadian mortgage market is undergoing a major transformation in 2026. With approximately 60% of mortgages up for renewal this year according to the Bank of Canada, homeowners are facing substantial increases in their monthly payments. In this complex economic environment, understanding how mortgage rates work and knowing how to negotiate the best conditions has become essential to protect your finances.
Table of contents
- Economic context 2026: a turning point for borrowers
- Comparison of current mortgage rates
- How mortgage rates work in Canada
- The benefits of using a mortgage broker
- Strategies to get the best mortgage rate
- Frequently asked questions
- Key figures of the 2026 mortgage market
Economic context 2026: a turning point for borrowers
The year 2026 represents an unprecedented challenge for Canadian homeowners. According to recent data, nearly 33% of mortgage holders will face an increase in their monthly payments by the end of the year. This situation stems directly from the transition between the exceptionally low rates of the pandemic period and today’s borrowing costs.
60% – Mortgages renewing in 2026
Mortgage brokers on the ground are witnessing this reality. Stéphane Bruyère, mortgage broker at Les Architectes hypothécaires, explains:
“Today, one of my clients in Quebec City was at 1.79%. He must renew his mortgage at 4.29% on his bungalow, with more than $400,000 still owing. His payment will increase by nearly $500 per month.”
The impact of the policy rate on the market
The Bank of Canada is currently holding its policy rate at 2.25% after a series of cuts in 2025. However, mortgage rates remain significantly higher than in 2020–2021, creating a substantial gap for borrowers renewing their loans. The prime rate stands at 4.45%, setting the floor for variable-rate mortgage products.
Housing market outlook
The Canadian Real Estate Association (CREA) anticipates a rebound in 2026, with sales expected to rise by 7.7% to reach 509,479 units, the highest level since 2021. The national average home price is projected to increase by 2.8% to $698,881, supported by pent-up demand, particularly among first-time buyers.
Comparison of current mortgage rates
Choosing between a fixed-rate and a variable-rate mortgage is one of the most important decisions when obtaining a residential mortgage. Below is a comparison table of the best rates available in January 2026.
| Loan type | Term | Rate (Banks) | Rate (Brokers) | Potential savings |
|---|---|---|---|---|
| Insured fixed | 1 year | 5.24% | 4.89% | 0.35% |
| Insured fixed | 3 years | 4.64% | 4.29% | 0.35% |
| Insured fixed | 5 years | 4.89% | 3.84% – 4.19% | 0.70% – 1.05% |
| Variable | 5 years | 5.20% | 3.45% – 3.95% | 1.25% – 1.75% |
“The best five-year fixed rate is around 4.19%”
— Stéphane Bruyère, mortgage broker
Fixed vs. variable rates: which option to choose?
- Fixed rates:
- Payment stability and predictability
- Protection against future rate increases
- Ideal for tight budgets
- Preferred by 85% of Quebec borrowers
- Variable rates:
- Potential savings if rates decline
- Greater flexibility
- Risk of payment increases
- Currently more advantageous with a spread of 0.40% to 1.35%
In 2026, the context slightly favours variable rates for risk-tolerant borrowers, as economists expect policy rates to stabilize or decline modestly during the year.
How mortgage rates work in Canada
Understanding the mechanisms that determine your mortgage rate allows you to negotiate more effectively and identify potential savings opportunities.
Factors influencing mortgage rates
1. The Bank of Canada policy rate
The Bank of Canada adjusts its policy rate to control inflation and stimulate the economy. This rate directly influences:
- The banks’ prime rate (currently 4.45%)
- Variable mortgage rates
- Indirectly, fixed rates through government bond yields
2. Bond yields
Fixed mortgage rates are primarily determined by five-year Government of Canada bonds. When investors anticipate economic growth or inflation, bond yields rise, pushing fixed mortgage rates higher.
3. Your personal credit profile
Your credit score plays a key role in the rate you are offered. Lenders assess:
- Your payment history
- Your debt ratios
- Your income stability
- Your down payment (minimum 5% for properties under $500,000)
20% – Average payment increase for fixed-rate renewals
The mortgage stress test
Since 2018, all borrowers must qualify at the higher of:
- The contract rate + 2%
- The Bank of Canada qualifying rate (currently 5.25%)
This test ensures you can absorb future rate increases without compromising your financial situation.
The benefits of using a mortgage broker
Using a mortgage broker in Canada offers significant advantages, especially in today’s environment of higher rates and widespread renewals.
Access to a wide lender network
- Major Canadian banks
- Foreign chartered banks
- Credit unions
- Alternative and private lenders
- Insurance companies
Substantial savings
Based on the comparison above, the difference between bank rates and broker rates can reach 1.05% on a five-year fixed mortgage.
Example:
On a $400,000 mortgage amortized over 25 years, a 0.70% difference represents:
- $97 in monthly savings
- More than $29,000 over the life of the mortgage
No cost to the borrower
Mortgage brokers are compensated by lenders, meaning their services are generally free for borrowers.
Strategies to get the best mortgage rate
Maximizing your chances of securing the best mortgage rate requires careful preparation and an understanding of available leverage.
Improve your credit profile
Your credit score directly affects the rate you receive. A score above 680 qualifies for better rates, while scores above 750 place you in the preferred category.
Optimize your down payment
| Down payment | Status | Benefits |
|---|---|---|
| 5% – 19.99% | Insured (CMHC) | Access to the best insured rates |
| 20% and more | Conventional | No mortgage insurance, competitive rates |
| 35% and more | Premium | Access to the lowest market rates |
Frequently asked questions
What is the difference between a fixed and a variable rate?
A fixed rate remains the same throughout the term, while a variable rate fluctuates based on the lender’s prime rate.
Can I switch lenders at renewal?
Yes. Renewal is the ideal time to shop around and change lenders without penalty.
Key figures of the 2026 mortgage market
- 60% of Canadian mortgages mature in 2026 (Source: Bank of Canada)
- 20% average payment increase for fixed-rate renewals (Source: Bank of Canada)
- 4.19% best insured five-year fixed rate in January 2026 (Source: Ratehub.ca)
- 85% of Quebec borrowers choose a five-year fixed mortgage
- 509,479 residential sales expected in 2026
- $698,881 projected national average home price
Conclusion
The year 2026 represents a pivotal moment for Canadian homeowners. With 60% of mortgages renewing and monthly payment increases that can reach $500, preparation and information are essential. Working with a mortgage broker in Canada can save you tens of thousands of dollars over the life of your mortgage while providing personalized guidance.
