Why More Canadians Are Moving Away From the Five-Year Fixed Mortgage
For decades, the five-year fixed mortgage was almost the default choice for Canadian homeowners. Lock in your rate, know your payment, and revisit the decision five years later.
That pattern is changing.
New data from Canada Mortgage and Housing Corporation (CMHC) shows that borrowers are increasingly choosing variable rates and shorter fixed terms instead. In the first quarter of 2026, 35.5% of new uninsured mortgages were variable rate, while another 49.5% had fixed terms shorter than five years. Put together, more than 85% of new uninsured mortgages fell outside the traditional longer-term fixed approach.
So why are Canadians reluctant to lock in for five years?
Flexibility Has Become More Valuable
Part of the shift comes down to what borrowers have experienced over the past several years. Rapid rate increases after 2022 showed just how quickly the mortgage landscape can change, while subsequent rate movements have made some borrowers hesitant to commit to one rate for too long.
Shorter terms provide an opportunity to revisit a mortgage sooner. Variable mortgages can also allow borrowers to benefit more quickly when rates decline. For homeowners who expect borrowing costs to fall, anticipate moving, or simply don't want to make a five-year commitment in an uncertain environment, that flexibility can be attractive.
There has also been an immediate pricing incentive. CMHC reports that variable mortgage rates at chartered banks fell below fixed rates beginning in late 2025, helping variable mortgages regain popularity. By February 2026, variable mortgages represented 42% of mortgages extended at chartered banks, while mortgages with the traditional five-year fixed term accounted for just 11%.
But flexibility isn't free.
The Trade-Off Is More Exposure to Rate Changes
A shorter mortgage term means borrowers return to the market sooner. A variable mortgage means changes in rates can affect borrowing costs even sooner, depending on how the mortgage is structured.
That can work in your favour when rates fall. It can also create additional pressure when they rise.
This is particularly important in Canada because most mortgages are renegotiated every few years. Unlike markets where borrowers commonly lock in rates for decades, Canadian households are regularly exposed to whatever interest-rate environment exists when their mortgage comes up for renewal.
Recent borrowers have already experienced that risk firsthand.
CMHC's 2026 Mortgage Consumer Survey found that 35% of renewing borrowers experienced increased financial pressure because of changing interest rates, with mortgage payments rising by an average of $375 per month among those borrowers.
The Lowest Rate Isn't Always the Best Mortgage
This is where mortgage decisions become more personal.
It can be tempting to compare a three-year fixed, five-year fixed and variable mortgage based entirely on today's rates. But the better question is what each option means for your finances over the period you are likely to have it.
Someone with significant room in their monthly budget may be comfortable accepting more rate uncertainty in exchange for flexibility. Someone operating with a tighter budget may place greater value on predictable payments. A homeowner expecting to sell or refinance in a few years could have completely different priorities from someone planning to stay in the same home for the next decade.
There are also penalties, prepayment privileges, portability, refinancing plans and the structure of a variable-rate product to consider.
In other words, mortgage term selection is ultimately a risk-management decision, not simply a rate decision.
Know What You're Trading
There isn't anything inherently better or worse about choosing a shorter fixed term, a variable mortgage or locking in for longer. Each option transfers a different amount of uncertainty between today and the future.
The important part is understanding that trade-off.
A lower rate or shorter commitment today can be valuable, but it may also mean making another major mortgage decision sooner than expected. A longer fixed term may provide more certainty, but could leave you locked into a higher rate if borrowing costs fall.
With Canadians increasingly moving away from the traditional five-year fixed mortgage, understanding why you're choosing a particular term may be more important than simply choosing whichever rate looks best today.
Before committing, consider how much payment uncertainty your budget can comfortably absorb, how long you expect to keep the mortgage, and what would happen if rates moved in either direction. The right mortgage isn't necessarily the one with the lowest rate today. It's the one that fits what you need your mortgage to do next.
Sources
Canada Mortgage and Housing Corporation (CMHC) What do Canadians do when interest rates are high? September 8, 2026.
Canada Mortgage and Housing Corporation (CMHC) 2026 Mortgage Consumer Survey. May 20, 2026.
Canada Mortgage and Housing Corporation (CMHC) Residential Mortgage Industry Report. Spring 2026.
Canada Mortgage and Housing Corporation (CMHC) Renewal wave peaks but still dominates mortgage market. May 12, 2026.
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
For decades, the five-year fixed mortgage was almost the default choice for Canadian homeowners. Lock in your rate, know your payment, and revisit the decision five years later.
That pattern is changing.
New data from Canada Mortgage and Housing Corporation (CMHC) shows that borrowers are increasingly choosing variable rates and shorter fixed terms instead. In the first quarter of 2026, 35.5% of new uninsured mortgages were variable rate, while another 49.5% had fixed terms shorter than five years. Put together, more than 85% of new uninsured mortgages fell outside the traditional longer-term fixed approach.
So why are Canadians reluctant to lock in for five years?
Flexibility Has Become More Valuable
Part of the shift comes down to what borrowers have experienced over the past several years. Rapid rate increases after 2022 showed just how quickly the mortgage landscape can change, while subsequent rate movements have made some borrowers hesitant to commit to one rate for too long.
Shorter terms provide an opportunity to revisit a mortgage sooner. Variable mortgages can also allow borrowers to benefit more quickly when rates decline. For homeowners who expect borrowing costs to fall, anticipate moving, or simply don't want to make a five-year commitment in an uncertain environment, that flexibility can be attractive.
There has also been an immediate pricing incentive. CMHC reports that variable mortgage rates at chartered banks fell below fixed rates beginning in late 2025, helping variable mortgages regain popularity. By February 2026, variable mortgages represented 42% of mortgages extended at chartered banks, while mortgages with the traditional five-year fixed term accounted for just 11%.
But flexibility isn't free.
The Trade-Off Is More Exposure to Rate Changes
A shorter mortgage term means borrowers return to the market sooner. A variable mortgage means changes in rates can affect borrowing costs even sooner, depending on how the mortgage is structured.
That can work in your favour when rates fall. It can also create additional pressure when they rise.
This is particularly important in Canada because most mortgages are renegotiated every few years. Unlike markets where borrowers commonly lock in rates for decades, Canadian households are regularly exposed to whatever interest-rate environment exists when their mortgage comes up for renewal.
Recent borrowers have already experienced that risk firsthand.
CMHC's 2026 Mortgage Consumer Survey found that 35% of renewing borrowers experienced increased financial pressure because of changing interest rates, with mortgage payments rising by an average of $375 per month among those borrowers.
The Lowest Rate Isn't Always the Best Mortgage
This is where mortgage decisions become more personal.
It can be tempting to compare a three-year fixed, five-year fixed and variable mortgage based entirely on today's rates. But the better question is what each option means for your finances over the period you are likely to have it.
Someone with significant room in their monthly budget may be comfortable accepting more rate uncertainty in exchange for flexibility. Someone operating with a tighter budget may place greater value on predictable payments. A homeowner expecting to sell or refinance in a few years could have completely different priorities from someone planning to stay in the same home for the next decade.
There are also penalties, prepayment privileges, portability, refinancing plans and the structure of a variable-rate product to consider.
In other words, mortgage term selection is ultimately a risk-management decision, not simply a rate decision.
Know What You're Trading
There isn't anything inherently better or worse about choosing a shorter fixed term, a variable mortgage or locking in for longer. Each option transfers a different amount of uncertainty between today and the future.
The important part is understanding that trade-off.
A lower rate or shorter commitment today can be valuable, but it may also mean making another major mortgage decision sooner than expected. A longer fixed term may provide more certainty, but could leave you locked into a higher rate if borrowing costs fall.
With Canadians increasingly moving away from the traditional five-year fixed mortgage, understanding why you're choosing a particular term may be more important than simply choosing whichever rate looks best today.
Before committing, consider how much payment uncertainty your budget can comfortably absorb, how long you expect to keep the mortgage, and what would happen if rates moved in either direction. The right mortgage isn't necessarily the one with the lowest rate today. It's the one that fits what you need your mortgage to do next.
Sources
Canada Mortgage and Housing Corporation (CMHC)
What do Canadians do when interest rates are high? September 8, 2026.
Canada Mortgage and Housing Corporation (CMHC)
2026 Mortgage Consumer Survey. May 20, 2026.
Canada Mortgage and Housing Corporation (CMHC)
Residential Mortgage Industry Report. Spring 2026.
Canada Mortgage and Housing Corporation (CMHC)
Renewal wave peaks but still dominates mortgage market. May 12, 2026.
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
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