Fixed vs Variable Mortgage Rates in Canada: Will the Bank of Canada Raise Rates? (October 2026)

By Mudit Chhura  |  Co-Founder, IndiBrick  |  Read Time: 8 Mins

If you are shopping for a mortgage or facing a renewal right now, you are probably asking the same two questions as thousands of other Canadians. Should I choose a fixed rate or a variable rate? And is the Bank of Canada about to raise interest rates?

The honest answer to the second question is that nobody knows for certain, but the odds have shifted a lot in a short time. That shift is exactly what makes the fixed versus variable decision more important this fall than it has been in years. Here is a clear, numbers-first breakdown of where rates stand as of October 5, 2026, what it would take for variable to lose its advantage, and how to decide.

Mortgage Rates in Canada Today: October 5, 2026

Here is how the 5 year fixed and variable options compare right now.

Mortgage Type	Rate (as of Oct 5, 2026)
5 year fixed, IndiBrick exclusive	4.05%
5 year fixed, major lenders (minimum)	4.40%
Variable, insured	3.29%
Variable, uninsured	3.50%

Rates are subject to change without notice and subject to qualification and lender approval. Check our website for the latest lowest rates.

On paper, variable is clearly cheaper today. The gap between the IndiBrick exclusive fixed rate and the lowest variable rate is under one percentage point, while the gap between variable and the 4.40% minimum most major lenders are offering on fixed terms is closer to a full point or more. That gap is the entire story, because it determines how much room the Bank of Canada has to raise rates before variable stops being the cheaper choice.

Will the Bank of Canada Raise Interest Rates?

The Bank of Canada's policy rate has sat at 2.25 percent for roughly a year, through seven consecutive holds. Until recently, markets treated every meeting as a near-certain hold. That has changed. After the Bank's September 2 decision, market odds of a hold were around 94 percent. By mid-September, traders were pricing the October 28 meeting as close to a coin flip, with some measures tilting slightly toward a hike.

• Inflation was 3 percent in August, at the very top of the Bank's target range, with elevated energy prices tied to the conflict in the Middle East adding pressure
• The US Federal Reserve raised rates in September for the first time in more than three years, which tends to pull Canadian bond yields higher
• Economists are split. Some expect the Bank to hold in October and hike in early 2027, while others expect a move as early as December
• The Bank's next decisions are scheduled for October 28 (alongside a Monetary Policy Report) and December 9, 2026

You do not need to predict the Bank of Canada perfectly. You only need to know how much of a hike your budget can handle, and how many hikes it would take to erase the savings you are chasing.

How Many Rate Hikes Until Variable Costs More Than Fixed?

This is the calculation most borrowers never run. Variable rates move almost immediately with each Bank of Canada change. Using a standard 0.25 percent hike as the unit, here is how many increases it would take for variable to catch up to fixed.

Comparison	Gap	Hikes to Match
Variable (insured, 3.29%) vs IndiBrick fixed (4.05%)	0.76%	About 3
Variable (uninsured, 3.50%) vs IndiBrick fixed (4.05%)	0.55%	About 2 to 3
Variable (insured, 3.29%) vs major lender fixed (4.40%)	1.11%	About 4 to 5
Variable (uninsured, 3.50%) vs major lender fixed (4.40%)	0.90%	About 4

So against the IndiBrick exclusive fixed rate, it would take roughly two to three consecutive Bank of Canada hikes for a variable mortgage to cost the same. Against the 4.40 percent minimum offered by major lenders, you would need four or five. If the Bank stays on hold, or only moves once or twice over your term, variable can come out ahead. If it moves three or more times, you lose the advantage and keep paying more every month.

It is also worth remembering that a variable borrower is not locked into that path. If rates start rising and you decide you want certainty, you can try to convert to a fixed rate, but the fixed rates available at that point will already be higher than the ones on the table today.

Why Fixed Rates Are Already Telling You Something

Fixed mortgage rates do not follow the Bank of Canada's policy rate directly. They are priced off Government of Canada bond yields, and bond markets look forward. When investors expect the Bank to raise rates, bond yields tend to rise first, and fixed mortgage rates follow before the Bank has actually done anything.

That is exactly what the current gap between fixed and variable reflects. Elevated fixed rates already factor in expected Bank of Canada increases, which is a meaningful signal that markets see hikes on the horizon. It also explains why waiting for the Bank's announcement before locking in is not a guaranteed win. By the time a hike is official, much of the move in fixed rates has often already happened.

Fixed vs Variable: Which One Fits You?

Factor	Fixed Rate	Variable Rate
Payment stability	Predictable for the full term	Can change when the Bank moves
Starting rate	Higher today	Lower today
Exposure to Bank of Canada hikes	None during the term	Direct and immediate
Best for	Borrowers who want certainty and tight budgets	Borrowers with cash flow room and higher risk tolerance
Main risk	Overpaying if rates stay flat or fall	Payment shock if rates keep rising

If you want to lock in and stop worrying about rates, the IndiBrick exclusive 4.05 percent 5 year fixed is the strongest option on the market right now, and it sits a meaningful distance below the 4.40 percent minimum most major lenders are offering. If you are comfortable with risk and have room in your budget to absorb increases, variable is cheaper on paper today, but the risk is real and it runs in one direction if the Bank starts hiking.

A Simple Way to Decide

• Stress test your budget for a 0.50 to 0.75 percent increase. If that payment would strain you, fixed is the safer fit
• Check your renewal date and ask for a rate hold, since you can usually secure today's rate well ahead of your renewal
• Self-employed and commercial borrowers with irregular income often benefit most from payment certainty
• Compare more than one lender, since the spread between the lowest rate and the average offer is currently wide

Frequently Asked Questions

Is a fixed or variable mortgage better right now in Canada?

As of October 5, 2026, variable rates are lower on paper at 3.29 percent insured and 3.50 percent uninsured, versus fixed rates starting at 4.05 percent with IndiBrick and 4.40 percent at most major lenders. Fixed is better for borrowers who want payment certainty, while variable suits those with cash flow flexibility and higher risk tolerance.

Will the Bank of Canada raise interest rates in October or December 2026?

It is not confirmed. Markets have treated the October 28 decision as close to a coin flip, and some economists expect a hike in December or early 2027. The Bank's policy rate has been held at 2.25 percent for about a year.

How many rate hikes would it take for variable to match fixed?

Against a 4.05 percent fixed rate, roughly two to three 0.25 percent Bank of Canada hikes would bring a 3.29 to 3.50 percent variable rate level with fixed. Against a 4.40 percent fixed rate, it would take about four to five.

Why are fixed mortgage rates higher than variable rates?

Fixed rates are priced off Government of Canada bond yields, which reflect market expectations for future interest rates. When markets expect rate increases, fixed rates rise ahead of the Bank of Canada, while variable rates only move once the Bank actually changes its policy rate.

What is the difference between an insured and uninsured variable rate?

Insured mortgages carry default insurance, typically required when the down payment is under 20 percent, and lenders generally offer lower rates on them. Uninsured mortgages, such as those with 20 percent or more down, usually carry a slightly higher rate.

The Bottom Line

Variable is lower on paper, but it comes with real risk in a year when inflation is at the top of the Bank's range, energy prices are elevated, and markets are openly debating a hike. Fixed rates are higher, but they already price in much of the tightening markets expect, and they take the guesswork out of your budget for the next five years.

If you want to lock in and not worry about rates, the IndiBrick exclusive 4.05 percent fixed rate is the strongest option available today. If you are leaning variable, make sure you know exactly how many increases your budget can absorb. Either way, the best move is to speak with an advisor who can analyze your specific situation, and to keep checking our website for the lowest rates, since they can change quickly.

---