Renewing your mortgage this fall? The fixed-variable math just flipped

If your mortgage renews in the next few months, you're in the biggest cohort of the cycle: industry estimates put roughly 1.8 million Canadian mortgages renewing across 2025 and 2026, peaking this year. Many of them were five-year fixed loans signed at 2021's sub-2 per cent rates — which means the renewal letter arriving this fall is the moment the last cheap-money era finally ends.

And it arrives into an unusual market: the Bank of Canada has held its policy rate at 2.25 per cent for seven straight decisions, while five-year fixed rates have drifted up — leaving variable rates around 3.3 per cent against competitive five-year fixed offers near 4.09 per cent. After years in which fixed was the cheaper choice, the spread has flipped by roughly three-quarters of a point.

This is general information, not financial advice. Talk to a mortgage broker or advisor about your own numbers.

The renewal shock, in real numbers

Take a common Toronto case: a $600,000 mortgage signed in fall 2021 at 1.94 per cent on a 25-year amortization. The payment has been about $2,523 a month, and after five years the balance is roughly $502,000. Renewing that balance over the remaining 20 years:

• At a 4.09 per cent five-year fixed: about $3,057 a month — $534 more than you've been paying, a 21 per cent jump.
• At a 3.30 per cent variable: about $2,854 — $331 more.

The gap between the two choices is about $202 a month, or roughly $12,100 over a five-year term if rates stayed where they are. That "if" is the whole decision.

Variable is cheaper on day one by about $200 a month. What you're really buying with fixed is certainty that the Bank's next surprise can't touch your payment.

Why the hold doesn't help fixed rates

The Bank's overnight rate drives variable mortgages; fixed rates price off the five-year Government of Canada bond yield, which has climbed to around 3.3 per cent on inflation and heavy government borrowing — the dynamic we unpacked when prices dipped under $1 million while rates rose. Most big banks expect the policy rate to hold at 2.25 per cent through year-end, though at least one forecaster sees a move up by December, and some economists now flag a hike as the risk case rather than a cut. The next decision lands October 28. A variable borrower is exposed to that call eight times a year; a fixed borrower is exposed to the bond market only on renewal day.

Don't sign the first offer

Renewal is the one moment your lender has to compete for you all over again — and the posted renewal rate in the letter is rarely the best available. Shop it, and run your own numbers first: our sister site metrestick.ca has calculators that turn your balance, rate and amortization into a payment — and show what a half-point move does to it. Budget past the rate, too: appraisal, discharge and legal fees if you switch lenders, plus the renewal costs that aren't the rate. If the new payment genuinely doesn't fit, act early — rising GTA arrears are what waiting looks like at scale.

While you're at it, audit the property

A renewal is a natural moment to re-check the asset itself. Pull your building or house's permit history, check for open orders, confirm what your property tax actually is for the years ahead, and set up monitoring so anything new on the property — or next door — reaches you before it reaches your home's value.