FIXED OR VARIABLE? The 2025 Mortgage Dilemma for Canadian Borrowers

Fixed-rate mortgages offer stability. If your top priority is budgeting with certainty and avoiding payment shocks, locking in a fixed rate may still be your safest bet. Fixed rates have settled in recent months, and while they’re not at record lows, they’re still relatively competitive given the past two years of volatility.

On the other hand, variable rates are gaining appeal again—especially for borrowers who believe the Bank of Canada has more cuts ahead. With some lenders already pricing in future reductions, the potential for lower payments down the road is real. Variable loans also come with a critical advantage: significantly lower break penalties. That matters, because a surprising number of Canadians—nearly 60%—don’t keep their mortgage for the full five-year term.

Caught in between? Consider a hybrid mortgage, which splits your loan into fixed and variable components. It’s a practical hedge against uncertainty, allowing you to benefit from rate drops while insulating part of your mortgage from rising costs.

But here’s the part most borrowers overlook: the structure of your mortgage often matters more than the rate itself. Features like portability, prepayment privileges, and blend-and-extend flexibility can save you thousands over the life of your mortgage—and give you more control if your plans change.

In today’s market, the smartest move isn’t about picking fixed or variable in isolation. It’s about building a mortgage strategy that fits your lifestyle, your timeline, and your risk tolerance. Because in 2025, it’s not just about rate—it’s about readiness.