Why More Borrowers Are Choosing Variable Right Now

The shift CMHC is reporting

For most of the last few years, the five-year fixed mortgage was the default choice for anyone nervous about where borrowing costs were headed. That's no longer true.

According to Canadian Mortgage Trends, reporting on CMHC's Residential Mortgage Industry Report, variable mortgages became the most popular choice among borrowers extending a mortgage at a chartered bank in late 2025 and early 2026. By February 2026, they made up 42% of extended mortgages, while a traditional five-year fixed term accounted for just 11%.

CMHC points to pricing as the main driver: variable mortgages fell below fixed mortgages in late 2025 for the first time since 2022, and continued uncertainty about where borrowing costs go next made a lot of people reluctant to lock into a full five-year term. The corporation also noted borrowers have been gravitating toward shorter terms generally, which makes the market more sensitive to future changes.

• Variable mortgages: 42% of extended mortgages at chartered banks by February 2026.
• Traditional five-year fixed mortgages: just 11% over the same period.
• Typical borrowing costs eased from roughly 4.8% in January 2025 to around 4.2% in January 2026.
• Residential mortgage debt across Canada surpassed $2.4 trillion in January 2026, up 4.8% from a year earlier.

The renewal wave CMHC says has already peaked

The wave of mortgages renewing at higher borrowing costs after the ultra-low-cost pandemic years likely peaked in 2025, CMHC says. The number of borrowers renewing in 2026 is expected to run about 13% lower than in 2025, which the agency says should ease concerns about a concentrated renewal crunch.

That doesn't mean the pressure is gone everywhere. The national share of mortgages more than 90 days past due rose to 0.24% in the fourth quarter of 2025, up from 0.21% a year earlier. Toronto saw one of the largest increases, with arrears climbing 45% year over year, while Ontario's overall share rose 35%.

At the national level, mortgage arrears remain low by historical standards and the mortgage system overall is stable, but pockets of significant stress still exist beneath the surface, particularly in areas like Toronto and Vancouver.— Aled ab Iorwerth, Deputy Chief Economist, CMHC

Why more first-time buyers are choosing insured mortgages

CMHC also flagged a jump in insured lending following federal insurance rule changes rolled out in late 2024. In the fourth quarter of 2025, 54% of mortgages extended to first-time buyers by chartered banks were insured, up from the typical mid-40% range seen before those changes took effect.

The changes allowed eligible first-time buyers purchasing newly built homes to access 30-year amortization instead of the previous 25-year maximum, later expanded to all first-time buyers and anyone buying newly built. The federal government also raised the maximum home price eligible for mortgage insurance from $1 million to $1.5 million. If you're weighing what any of that means for your own numbers, our First Home Hub walks through the current rules in plain language.

A separate 2024 change from Canada's banking regulator, OSFI, removed the requirement for uninsured borrowers to pass a stress test when switching lenders at renewal without increasing their loan amount. CMHC says uninsured mortgage switches rose 34% between the second half of 2024 and the second half of 2025 as a result.

How fixed became the default in the first place

It's worth remembering why five-year fixed mortgages dominated for as long as they did. Through the peak of the renewal wave, borrowers coming off pandemic-era mortgages faced a genuine jump in borrowing costs, and a fixed term offered something a lot of people needed after that shock: certainty about what the number would be for the next five years, regardless of what happened next.

That trade-off made sense while variable pricing sat above fixed pricing and the outlook was genuinely uncertain in either direction. Once variable pricing dropped below fixed in late 2025, the trade-off flipped for a lot of borrowers — paying more for certainty stopped being the obvious choice it had been a year earlier. CMHC's data is really a record of that flip playing out across the market, not evidence that variable is now simply better.

Fixed vs. variable is a risk question, not a pricing bet

Forty-two percent of borrowers choosing variable doesn't make variable the right choice for you specifically. It means a lot of people, facing a lot of different situations, made a similar call in a specific window — and that window can close as quickly as it opened.

A useful way to frame it: with a fixed term, your payment is fixed and your only real variable is opportunity cost — what you'd have paid under a different structure. With a variable mortgage, your payment (or your amortization, depending on the product) moves with the Bank of Canada's overnight benchmark, in either direction, for the life of the term. Someone with a tight monthly budget and little cushion generally has less room to absorb that movement than someone with more flexibility elsewhere in their finances — and that's true regardless of which option happens to be cheaper this month.

If restructuring mid-term rather than choosing between the two up front is more your situation, RateShield Advance is built around exactly that question — combining a mortgage with a HELOC so the structure itself can flex as your circumstances change, instead of locking you into one choice for the full term. And before deciding anything, our calculators let you compare both paths side by side using real Canadian semi-annual compounding, not a simplified estimate.