Market Insight for January 30

Fixed mortgage rates are unlikely to decline anytime soon as ongoing geopolitical instability continues to rattle global markets, driving more homebuyers toward variable-rate mortgages, according to brokers.

On Wednesday, the Bank of Canada confirmed it would hold its benchmark interest rate at 2.25 per cent, a move economists expect will likely remain in place for much of the year.

Borrowing costs have shifted back toward a neutral range, no longer providing economic stimulus nor holding growth back — a sign of a return to more typical conditions. While rates could still edge slightly higher or lower depending on economic performance, the most probable outcome is an extended period of steadiness.

For buyers and homeowners nearing renewal, that predictability is key, as “stability matters” when it comes to household budgeting and financing decisions.

Although fixed-rate mortgages still represent the bulk of outstanding loans, variable-rate products are seeing renewed interest as the Bank of Canada keeps rates on hold.

Variable-rate mortgages fluctuate directly with changes to the central bank’s policy rate, moving up or down in tandem. Fixed-rate mortgages, on the other hand, are generally linked to the five-year bond yield, meaning increases in bond yields typically translate into higher fixed mortgage rates.

For borrowers weighing their options, it’s worth noting that five-year bond yields have been especially volatile in recent weeks.

That volatility has prompted some lenders to raise fixed mortgage rates as they reprice their offerings.

Fixed rates are not expected to ease in the short term, as “rising geopolitical tensions and unpredictable U.S. trade policy have kept global bond yields firmly elevated,” said Penelope Graham, mortgage expert at Ratehub.ca.

Canada’s best insured five-year fixed mortgage rate currently sits at 3.84 per cent, which is not far off from variable-rate options. For buyers seeking certainty, locking into a fixed rate doesn’t represent a major trade-off versus choosing variable, Graham noted.”

“Meanwhile, variable rates are available as low as 3.35 per cent — the most competitive level since the summer of 2022, according to Graham.

“You’re still paying more each month than in the past, but it’s a significant improvement from a couple of years ago,” she said, pointing out that variable rates were near 5 per cent just 18 months ago.

Since June 2024, the central bank has delivered nine cumulative rate cuts, bringing its policy rate down from 5 per cent to 2.25 per cent.

As a result, variable-rate mortgages are taking up a larger share of the market.

In 2025, fixed-rate mortgages represented 88.6 per cent of all mortgages, while variable rates made up 11.4 per cent, Graham said — up from just seven per cent in 2024.

By January 2026 variable-rate mortgages accounted for 26 per cent of all mortgages, rising from 19 per cent in December.

“We’ve seen a fairly strong pickup,” Graham said. “Fixed rates still represent more than 70 per cent of all inquiries, and I don’t expect that to shift dramatically. But demand for variable rates always increases in this type of rate environment.”