Should I Lock In My Variable Mortgage Before 2027?

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 9 min read — Variable or lock in? A side-by-side cost comparison after the October 2026 hike, plus conversion rules and the questions to ask your lender.

This guide is for Ontario homeowners with a variable-rate mortgage who are asking whether to lock into a fixed rate after the Bank of Canada’s 28 October 2026 hike. You will get the facts on how converting works, a side-by-side cost comparison under different rate paths, and a simple test to help you decide with your lender or mortgage professional.

What does it mean to lock in a variable mortgage?

Locking in means converting your variable-rate mortgage into a fixed-rate mortgage with the same lender before your term ends. Your rate stops moving with prime, and your payment is set for the new fixed term.

Most big-bank variable mortgages allow this. RBC, for example, says on its website that you can switch to a fixed rate at any time, typically at no cost, as long as the new fixed term is the same length as, or longer than, the time left on your variable term. You get the lender’s fixed rate on the day you convert, not the rate from when you first signed. Other lenders have their own rules, so read your contract or call before you decide.

What changed after the October 2026 rate hike?

On 28 October 2026 the Bank of Canada raised its policy rate from 2.25% to 2.50%, its first increase in more than three years. Big-bank prime went from 4.45% to 4.70% the next day. Every variable mortgage priced off prime rose by 0.25 points.

Fixed rates had already been climbing. They follow Government of Canada bond yields, which rose through September and October as markets started to expect higher rates. When I checked on 2 November 2026, RBC’s advertised rates were:

Source: RBC Royal Bank mortgage rates page, viewed 2 November 2026. Rates change often; your offer may differ.

So a typical variable borrower today pays about 0.74 points less than a new five-year fixed. Locking in means paying more now in exchange for certainty later.

Will rates keep going up in 2027?

Forecasters lean toward more hikes, but they disagree on how many. Here is what they said, with the source for each:

• Bank of Canada: Governor Tiff Macklem said a further increase could be needed but the Bank will move carefully, one meeting at a time.
• RBC: Its October 2026 forecast has the policy rate rising to 3.25% by the end of 2027. Chief economist Frances Donald said after the decision that RBC projects three more hikes.
• Desjardins: Expects one more hike before the cycle ends.
• Markets: Priced about a 43% chance of a hike on 9 December 2026, per LSEG data reported by The Canadian Press.

Remember that these are forecasts. In the last few years, rate paths changed sharply within months.

How much would locking in cost or save? A worked example

Here is an illustration. It assumes a $600,000 balance, a 25-year amortization and five years until the next renewal. It compares staying variable at prime minus 0.30% with locking into a 5.14% five-year fixed today. Payments on the variable are assumed to adjust with prime. The rate paths are hypothetical, not predictions.

Source: my calculations, semi-annual compounding, rounded to the nearest $100. Rates from RBC’s site on 2 November 2026. Hypothetical illustration only, not a forecast or advice.

The lesson: in this example, locking in only wins if variable rates rise by about three more hikes and stay there for most of the term. If rates rise less than that, or fall later, the variable comes out ahead. Locking in is insurance against a bigger rise, and the price of that insurance is the higher rate you pay from day one.

Should I lock in my mortgage now or wait?

There is no answer that fits everyone, and I cannot give personal financial advice. What I can do is share the questions my clients find most useful when they talk to their lender or a licensed mortgage professional:

• Could you handle the payment if prime rose another 0.75 points? On $600,000 that is about $250 a month more than today. If yes, the variable may still suit you. If that would cause real stress, the certainty of a fixed rate has value.
• Do you have fixed or adjustable payments? A fixed-payment variable hides the cost of hikes by reducing your principal. If your principal is barely moving, waiting carries more risk.
• Might you sell or refinance before the term ends? Breaking a fixed mortgage early can be expensive. The FCAC explains that lenders usually charge the higher of three months’ interest or the interest rate differential (IRD), which can be much larger. RBC notes that breaking a variable mortgage early typically costs much less than breaking a fixed one. My guide to how IRD penalties are calculated shows why this matters.
• When is your renewal? If your term ends in 2027, locking in now may mean committing to a new fixed term of the same length or longer. Comparing offers at renewal may be the better moment.

What if my fixed-payment variable is close to its trigger rate?

This is where waiting carries the most risk. With a fixed-payment variable, your payment does not rise with prime. Instead, more of it goes to interest. The Financial Consumer Agency of Canada (FCAC) explains that if rates climb far enough, none of the payment reduces the principal, and the amount you owe can start to grow. That level is called the trigger rate, and the FCAC says to check your agreement or ask your lender for it.

If you are close to it, you have a few choices. The FCAC lists higher regular payments, lump-sum payments, switching to a fixed rate and extending the amortization. Extending lowers the payment but adds interest over time. Locking in stops the slide if rates keep rising, but the fixed payment will be higher than what you pay now. Call your lender, ask for your trigger rate in writing, and ask what each option would do to your payment and balance.

Can I convert my variable mortgage to fixed without a penalty?

Usually yes, if you stay with the same lender. Converting is not the same as breaking your mortgage. RBC, for example, says conversion is typically at no cost when the new fixed term is at least as long as what remains. Moving to a different lender mid-term is different: that means breaking your mortgage, which triggers a prepayment penalty plus possible discharge and legal fees.

Ask your lender these questions before you sign:

1. What fixed rate will I get, and is it the advertised special rate or a higher one?
2. What term lengths can I choose?
3. How will my prepayment penalty be calculated after I convert?
4. Do any fees apply to the conversion?

What about a blend-and-extend instead?

A blend-and-extend is another option some lenders offer. The FCAC describes it as extending your mortgage before your term ends, so your old rate and the new term’s rate are blended into a single rate. It avoids a prepayment penalty, though admin fees may apply. Lenders must explain how they calculate the blended rate. It is mainly used with fixed-rate mortgages, but it is worth asking about if you are near the end of a term.

For more background, see my guides to choosing fixed or variable and working with a mortgage broker or your bank.

What to do next

1. Find your current rate, margin, payment type and remaining term on your latest statement.
2. Ask your lender for a written lock-in quote: rate, term options and how your penalty would be calculated after conversion.
3. Test your budget against a variable payment 0.75 points higher than today.
4. Write down whether you might sell, move or refinance in the next five years.
5. Review the numbers with a licensed mortgage professional before the 9 December 2026 Bank of Canada decision.

Frequently asked questions

Sources

• Bank of Canada raises the policy rate by 25 basis points to 2½% (28 Oct 2026)
• RBC Royal Bank mortgage rates
• RBC: Fixed vs variable rates (converting to fixed)
• RBC Economics Monthly Forecast Update, October 2026
• FCAC: Reduce prepayment penalties
• FCAC: Breaking your mortgage contract (blend-and-extend)
• FCAC: Managing your money when interest rates rise
• Investment Executive / The Canadian Press: Bank of Canada delivers 1st hike in three years

Related reading

• The Bank of Canada Raised Rates: What It Means for GTA Buyers, Sellers and Owners
• Variable-Rate Mortgage After the Hike: How Much Your Payment Changes
• Mortgage Renewal in 2027 After the Rate Hike: Your Options in Ontario
• Will Mortgage Rates Go Down in 2027? What to Plan For in Canada