Fixed or Variable Mortgage in 2027? A Plain Comparison

Published 2 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty

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By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 9 min read — Current fixed and variable rates, a five-year cost test against every published forecast, and how each type affects your stress test and penalty.

Short answer

In November 2026 a big-bank five-year variable was 4.40% and a five-year fixed 5.14%. On $600,000, the variable stays cheaper over five years under every published forecast path, but only narrowly if rates rise three more times. Pick fixed for certainty, variable for lower payments and smaller penalties.

This guide is for GTA buyers and anyone renewing in 2027 who has to pick between a fixed and a variable mortgage after the October 2026 rate hike. You will get current advertised rates, a five-year cost comparison built on the published forecasts, how each type affects your stress test and your penalty, and a plain way to decide.

Should I choose a fixed or variable mortgage in 2027?

There is no answer that is right for everyone, but the numbers as of November 2026 are clear enough to frame the choice. A five-year variable at a big bank costs about 0.74 points less than a five-year fixed. In my illustration below, the variable stays cheaper over five years under every published forecast path I could verify, including the one with three more hikes, but only just in that case. The fixed rate buys certainty; the variable buys a lower starting payment, a smaller penalty if you break it, and exposure to whatever the Bank of Canada does next.

So the real questions are about you, not the forecast: could you absorb a higher payment, and are you likely to sell, move or refinance before the term ends? I come back to both below.

What are fixed and variable mortgage rates in November 2026?

Here are RBC’s advertised rates on 10 November 2026. I use one big bank so the comparison is like for like; your own quote may differ.

Product (25-year amortization or less)	Special offer	Posted rate
3-year fixed closed	5.09%	6.25%
5-year fixed closed	5.14%	6.19%
5-year fixed, high-ratio (insured, under 20% down)	4.84%	n/a
5-year variable closed	Prime − 0.30% (4.40%)	Prime (4.70%)
5-year variable, high-ratio (insured)	Prime − 0.60% (4.10%)	n/a

Source: RBC Royal Bank mortgage rates page, viewed 10 November 2026. Prime is 4.70%. Rates change often.

On a $600,000 mortgage over 25 years, that is about $3,538 a month at 5.14% fixed versus $3,288 at 4.40% variable, a gap of $250 a month, by my arithmetic. For insured buyers the gap is similar: $3,435 at 4.84% versus $3,189 at 4.10%.

Why is fixed higher? Fixed rates follow Government of Canada bond yields, which rose sharply in September and October 2026 as markets priced in higher rates. Variable rates follow prime, which rose only once, on 29 October. My guide to what moves five-year fixed rates explains the bond link.

How many rate hikes would make a variable mortgage cost more than a fixed?

With a 0.74-point gap, prime would need to rise about three times (0.75 points) before a new variable borrower pays the same rate as fixed, and it would need to stay there for most of the term. Here is how five years would play out on a $600,000 mortgage starting in January 2027, using the forecast paths that were published as of November 2026:

Scenario (5 years from January 2027)	Starting payment	Interest paid	Balance after 5 years
5-year fixed at 5.14%	$3,538	$144,500	$532,200
Variable, no further changes (policy rate 2.50%)	$3,288	$123,200	$525,900
Variable, one hike to 2.75% by March 2027 (Bank of Canada survey median)	$3,288	$130,100	$528,000
Variable, up to 2.75% then cuts to 2.25% by end of 2027 (TD path)	$3,288	$118,000	$524,200
Variable, three hikes to 3.25% by end of 2027 (Scotiabank)	$3,288	$142,000	$531,600

Source: my calculations, adjustable-payment variable at prime − 0.30%, prime = policy rate + 2.20, rates held flat after the last forecast change, semi-annual compounding, rounded to $100. Forecasts from the Bank of Canada Market Participants Survey Q3 2026, TD Economics (October 2026) and Scotiabank Economics. Illustration only.

Two lessons. First, even the highest path only brings the variable close to the fixed, because the hikes arrive gradually. Second, the forecasts stop at 2027 or 2028. If rates rise faster or further than anyone expects, the fixed wins, and that protection is exactly what you pay the extra 0.74 points for.

Which is easier to qualify for under the 2027 stress test?

The variable, by a meaningful amount. Federally regulated lenders must qualify you at the greater of 5.25% or your contract rate plus 2 points, according to OSFI’s minimum qualifying rate. Because the test adds 2 points to whatever rate you choose, the lower variable rate produces a lower test rate:

5-year fixed at 5.14% is tested at 7.14%: about $4,254 a month on $600,000.
5-year variable at 4.40% is tested at 6.40%: about $3,983 a month on $600,000.

Put another way, if your income supports $4,000 a month of mortgage payment at the qualifying rate, that is roughly $603,000 of mortgage on the variable and $564,000 on the fixed, by my arithmetic. That $39,000 difference can decide whether a GTA purchase works. But qualifying for more is not the same as being able to afford more if prime rises. My guide to how the stress test works covers the ratios.

Free tool — what can you actually afford?

What does it cost to break a fixed or variable mortgage?

This is where the two types differ most, and where many GTA owners get caught when they move or separate before the term ends.

The Financial Consumer Agency of Canada (FCAC) says the penalty on a closed mortgage is usually the higher of three months’ interest or the interest rate differential (IRD). The IRD compares your rate with the lender’s current rate for the time left. In the FCAC’s own example, a $200,000 balance at 6% with 36 months left would face about $3,000 in three months’ interest but about $12,000 under the IRD, so the penalty is about $12,000.

RBC says penalties for breaking a variable mortgage are typically much lower than for a fixed. On a $600,000 variable at 4.40%, three months’ interest is about $6,600, by my arithmetic. An IRD on a fixed mortgage of the same size can be several times that, depending on how rates and posted rates have moved. Read your contract’s penalty clause before you sign, and see my guide to how IRD penalties are calculated.

Can I switch from a variable to a fixed mortgage later?

Usually, yes, with the same lender. RBC says most lenders let you convert a variable to a fixed rate during the term, typically at no cost, as long as the new fixed term is equal to or longer than what is left on the variable. The FCAC is more cautious: it describes a convertibility feature that usually involves a fee and possible conditions, and notes that the new fixed rate may be higher than the variable you were paying. Ask your lender for its exact terms in writing.

Keep in mind that you convert at the fixed rate on that day, not today’s rate. If bond yields jump, the fixed rate you lock into could be higher. My guide on locking in a variable mortgage shows when converting tends to make sense.

Is a 3-year fixed or a hybrid mortgage a middle ground?

Both can be. RBC’s three-year fixed special was 5.09% in November 2026, only 0.05 points below the five-year. You get the same payment certainty but a shorter commitment, which means renewing in 2030 instead of 2032 and a smaller IRD exposure if you break it, since fewer months remain. The trade-off is facing the market again sooner.

A hybrid, which the FCAC calls a combination mortgage, splits the loan into a fixed part and a variable part. The fixed part partly protects you if rates rise and the variable part partly benefits you if they fall. The FCAC warns that each part may have different terms, which can make the mortgage harder to move to another lender at renewal.

Who should pick fixed and who should pick variable in 2027?

Lean fixed if…	Lean variable if…
A $200 to $250 monthly increase would strain your budget	You could absorb a higher payment from savings or income
You plan to stay in the home for the full term	You might sell, move or refinance within five years
You want to know your exact balance at renewal	You want the smaller penalty and the conversion option
You would lose sleep over each Bank of Canada decision	You will follow rates and review at each report date

Source: my summary of the FCAC’s guidance on who each rate type suits, applied to November 2026 rates.

Watch out

If you take a variable mortgage with fixed payments, check your trigger point. The FCAC explains that when rates rise far enough, none of your payment may go to the principal and the amount you owe can grow, and the lender may raise your payment. Ask for the trigger point in writing before you sign, and again after every hike.

My take

My view, and it is only a view, is that for 2027 the deciding factor is your life plans, not the forecast. If there is a real chance you will move within five years, the variable’s smaller penalty often matters more than its rate. If you are settling in for the long term and your budget is tight, the fixed rate’s certainty is worth the extra $250 a month on $600,000. Whatever you choose, make sure your budget works at a payment 0.75 points higher than your starting rate, and review my earlier fixed or variable guide for the basics. Confirm the details with a licensed mortgage professional.

What to do next

Get same-day quotes for a 3-year fixed, 5-year fixed and 5-year variable from at least two lenders.
Ask each lender how its penalty is calculated and whether its variable can convert to fixed for free.
Test your budget at your variable rate plus 0.75 points.
Write down how likely you are to move, sell or refinance in the next five years.
Choose, then put the Bank of Canada decision dates in your calendar so you can review at each one.

Need help with this? Talk to me.

I’m Jatin Dua, Broker of Record at RE/MAX Quantum Realty, and I’m the best agent to do this kind of work for you in Toronto and across the GTA. Over $100 million in GTA sales and 100+ families helped sell. Feel free to contact me any time: call or text 833-330-1925 or email [email protected].

Book a free call Call 833-330-1925

Frequently asked questions

Is fixed or variable better in 2027?

Neither is better for everyone. In November 2026, a big-bank five-year variable was 4.40% against 5.14% for a five-year fixed. In my illustration on $600,000, the variable stayed cheaper over five years under every published forecast path, but only slightly if rates rise three more times. Choose fixed for certainty, variable for a lower payment and smaller penalties.

What are 5-year fixed mortgage rates in 2027?

As of 10 November 2026, RBC’s advertised five-year fixed special was 5.14%, or 4.84% for insured buyers with under 20% down, against a posted rate of 6.19%. Rates for 2027 will follow Government of Canada bond yields. The Bank of Canada’s market survey expects the five-year yield to ease slightly, to a median 3.45% by the end of 2027.

What is the difference between fixed and variable mortgage rates right now?

About 0.74 percentage points at a big bank in November 2026: 5.14% for a five-year fixed versus 4.40% for a five-year variable at prime minus 0.30%. On a $600,000 mortgage over 25 years, that is about $250 a month, by my arithmetic. Prime would need to rise roughly three times to close the gap.

Will variable rates go up in 2027?

Most forecasts say at least once. The Bank of Canada’s market survey median expects the policy rate at 2.75% by March 2027, which would lift variable rates by 0.25 points. Scotiabank forecasts 3.25% by the end of 2027, while TD expects one hike and then cuts later in 2027. These are forecasts as of November 2026.

Does the stress test apply to variable mortgages in Canada?

Yes. Federally regulated lenders qualify both fixed and variable borrowers at the greater of 5.25% or the contract rate plus 2 points. Because variable rates are lower in November 2026, the test rate is lower too: about 6.40% for a 4.40% variable versus 7.14% for a 5.14% fixed, which lets variable borrowers qualify for more.

Is it cheaper to break a variable or fixed mortgage?

A variable is usually cheaper to break. RBC says variable-rate penalties are typically much lower than fixed. The Financial Consumer Agency of Canada says closed-mortgage penalties are usually the higher of three months’ interest or the interest rate differential, and its example shows an IRD four times larger than three months’ interest.

Can I switch from variable to fixed in the middle of my term?

Usually yes, with the same lender. RBC says conversion is typically at no cost if the new fixed term is at least as long as what remains, while the FCAC notes that convertibility features can involve a fee and conditions. You get the lender’s fixed rate on the day you convert, so ask for the terms in writing.

Should first-time buyers choose fixed or variable in 2027?

It depends on how tight the budget is. Insured first-time buyers saw about 4.84% fixed versus 4.10% variable at RBC in November 2026. If a $250 a month increase would cause real stress, fixed offers certainty. If you have savings to absorb rate changes and may move within five years, a variable can cost less.

Is a 3-year fixed a good idea in 2027?

It can be a sensible middle ground. RBC’s three-year fixed special was 5.09% in November 2026, almost the same as the five-year at 5.14%. You keep payment certainty, renew sooner in 2030 if rates have eased, and face a smaller penalty if you break it early because fewer months remain in the term.

Sources

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