The lowest 5-year variable mortgage rate in Canada is 3.40 per cent as of October 2, 2026. That is prime minus 1.05, and it sits 0.94 points below the best 5-year fixed rate of 4.34 per cent. The big banks are quoting between 3.60 and 4.12 per cent.
The rate is the easy part. The harder question is whether a variable rate is still the cheaper choice if the Bank of Canada starts raising rates in 2027, as markets expect. This page gives you the rates, then works through that question with real numbers on a typical GTA mortgage.
Today’s best 5-year variable rates
Prime is 4.45 per cent. The “discount” column shows how far below prime each lender is, which is the number that stays with you for the whole term. The payment columns assume a 25-year amortization.
| Lender | Rate | Discount to prime | Per $100,000 | On $794,728 |
|---|---|---|---|---|
| Lowest broker rate | 3.40% | Prime − 1.05 | $495 | $3,936 |
| Meridian Credit Union | 3.44% | Prime − 1.01 | $497 | $3,953 |
| Equitable Bank | 3.60% | Prime − 0.85 | $506 | $4,021 |
| RBC Royal Bank | 3.65% | Prime − 0.80 | $509 | $4,043 |
| Scotiabank | 3.65% | Prime − 0.80 | $509 | $4,043 |
| First National | 3.70% | Prime − 0.75 | $511 | $4,064 |
| Alterna Savings | 3.70% | Prime − 0.75 | $511 | $4,064 |
| Tangerine | 3.90% | Prime − 0.55 | $522 | $4,151 |
| CIBC | 3.95% | Prime − 0.50 | $525 | $4,173 |
| TD Bank | 3.99% | Prime − 0.46 | $527 | $4,190 |
| National Bank | 4.00% | Prime − 0.45 | $528 | $4,195 |
| BMO | 4.12% | Prime − 0.33 | $534 | $4,248 |
Rates as published by Ratehub.ca on October 2, 2026. The lowest rates are usually for insured mortgages, meaning a down payment under 20 per cent. Expect to pay 0.10 to 0.30 points more with 20 per cent down or on a refinance. Rates change without notice, so confirm with the lender.
Why $794,728? The average GTA home sold for $993,410 in August 2026. With 20 per cent down, that is the mortgage. The gap between the best rate and the highest big-bank rate on that mortgage is $312 a month, or about $18,700 over five years. Shopping the discount matters more than the fixed-or-variable decision for many buyers.
Variable against fixed on a GTA mortgage
At today’s best rates, on $794,728 over 25 years:
| Variable 3.40% | Fixed 4.34% | |
|---|---|---|
| Monthly payment | $3,936 | $4,328 |
| Interest paid over 5 years | $126,175 | $160,845 |
| Balance after 5 years | $684,737 | $695,881 |
If rates never move, variable saves $392 a month and $34,670 in interest over the term. You also owe about $11,000 less at renewal. That is the head start a variable borrower begins with.
How many hikes before fixed wins?
This is the question that decides it. We took the same mortgage and raised prime once, twelve months into the term, then held it there.
| Prime rises by | New payment | 5-year interest | Against fixed |
|---|---|---|---|
| No change | $3,936 | $126,175 | Variable ahead by $34,670 |
| 0.50 points | $4,144 | $141,202 | Variable ahead by $19,643 |
| 0.75 points | $4,250 | $148,747 | Variable ahead by $12,098 |
| 1.00 point | $4,357 | $156,312 | Variable ahead by $4,533 |
| 1.25 points | $4,466 | $163,897 | Fixed ahead by $3,052 |
| 1.50 points | $4,577 | $171,499 | Fixed ahead by $10,654 |
The break-even is a little over one full percentage point. That is four to five quarter-point hikes, arriving within the first year and never reversed. If the increases come later, or come to less than a point, variable still costs less.
Each quarter-point move changes the payment on this mortgage by about $107 a month. Before choosing variable, ask yourself whether your budget could absorb four of those.
Try it with your own numbers
Enter your mortgage, the two rates you have been quoted, and how far you think prime will move. The slider goes both ways, because rates can also fall.
The calculator uses Canadian conventions: fixed rates compound twice a year and variable rates monthly. It assumes one move in prime that then holds, and a payment that adjusts when the rate does. It is an estimate for comparison, not a mortgage quote.
Where rates are heading
The Bank of Canada held its policy rate at 2.25 per cent on September 2, 2026. It has not changed since October 29, 2025. The next announcement is October 28, 2026, and it comes with a new Monetary Policy Report.
The six big banks do not agree on what comes next:
| Bank | Policy rate, end of 2026 | Policy rate, end of 2027 | Implied rise |
|---|---|---|---|
| BMO | 2.25% | 2.25% | None |
| TD | 2.25% | 2.25% | None |
| CIBC | 2.25% | 2.75% | 0.50 |
| National Bank | 2.75% | 2.75% | 0.50 |
| Scotiabank | 2.75% | 3.00% | 0.75 |
| RBC | 2.25% | 3.25% | 1.00 |
Forecasts as compiled by nesto, updated September 17, 2026. Money markets are more aggressive than most of the banks and price in roughly one point of increases over the next twelve months.
Put that beside the break-even table. Two banks see no hikes, which leaves variable far ahead. Three see half to three quarters of a point, which still leaves variable ahead. Only the most aggressive forecast, RBC’s, and the market’s own pricing reach the one-point mark where the two roughly tie. On the forecasts available today, none of the six banks has variable clearly losing.
Forecasts are often wrong. In early 2022 almost nobody predicted what the next chart shows.
What variable borrowers lived through
Anyone who took a variable mortgage in 2021 at prime minus one was paying about 1.45 per cent. By July 2023, the same mortgage was at 6.20 per cent. Prime rose ten times in seventeen months, from 2.45 to 7.20 per cent.
Then it reversed. Nine cuts between June 2024 and October 2025 brought prime back to 4.45 per cent. A borrower who held on for the full five years saw both the worst and the recovery.
The lesson is not that variable is dangerous or that it is safe. It is that the discount you negotiate is permanent and the direction of rates is not. Today’s starting point is also different: the policy rate is 2.25 per cent, not the emergency 0.25 per cent of 2021, so there is less room for a shock of that size.
Three advantages that are not about the rate
You qualify for a larger mortgage
The federal stress test makes you qualify at the higher of 5.25 per cent or your rate plus two points. At 3.40 per cent variable, that is 5.40 per cent. At 4.34 per cent fixed, it is 6.34 per cent. A household earning $150,000 could qualify for roughly $703,000 on the variable rate and $648,000 on the fixed, a difference of about $55,000. Your own figure depends on your debts, property tax and heating costs.
The penalty to break it is small and predictable
Breaking a variable mortgage costs three months of interest. On $794,728 at 3.40 per cent, that is about $6,750. Breaking a fixed mortgage costs the greater of three months of interest or the interest rate differential, and at the big banks that differential is calculated from posted rates and can run to tens of thousands of dollars. If there is any chance you will sell, refinance or separate within five years, this matters as much as the rate.
You can lock in later
Most lenders let you convert a variable mortgage to a fixed rate at any time without a penalty. The catch is that you get the lender’s fixed rate on that day, which will already reflect the hikes you are trying to escape, and it may not be their best rate. Treat it as an exit, not as insurance.
Variable or adjustable: check which one you are offered
Lenders use “variable” for two different products.
- Adjustable-rate mortgage. Your payment changes every time prime changes. You always pay down the mortgage on schedule. Scotiabank, National Bank and most broker lenders work this way.
- Variable with a fixed payment. Your payment stays the same and the split between interest and principal changes. If rates rise far enough, the payment no longer covers the interest. That point is called the trigger rate, and in 2022 and 2023 it caught many borrowers at TD, BMO and CIBC, who then faced a larger balance at renewal.
The fixed payment feels safer month to month. The adjustable version is safer for the mortgage itself. Ask which one the quote is for.
Who a variable rate suits, and who it does not
It tends to suit you if your budget has room for a payment several hundred dollars higher, you may move or refinance within the term, you need the extra borrowing room from the stress test, or you expect rates to stay near where they are.
A fixed rate tends to suit you if you are buying at the top of what you can afford, your income is single or irregular, a rising payment would cause real stress, or you simply want to know the number for five years. Peace of mind has a price. Today it is about $392 a month on a GTA mortgage.
A third option is a hybrid mortgage, with part fixed and part variable. It halves both the saving and the risk.
How to get the lowest variable rate
- Compare the discount, not the rate. A quote of prime minus 1.05 beats prime minus 0.80 on every day of the term, whatever prime does.
- Ask a broker and your own bank. The lowest rates in the table come through brokers. Banks will often improve their posted discount when shown a competing offer.
- Know your category. Insured mortgages with less than 20 per cent down get the best pricing. Homes over $1.5 million cannot be insured, and neither can refinances.
- Read the restrictions. Some of the lowest rates limit prepayments or can only be broken if you sell the home. A slightly higher rate with normal terms is often the better deal.
- Get a rate hold. Lenders hold a quoted discount for 90 to 120 days. Lock it once you are house hunting.
Questions people ask
What is the best 5-year variable mortgage rate in Canada right now?
3.40 per cent as of October 2, 2026, which is prime minus 1.05. Among the big banks, RBC and Scotiabank are lowest at 3.65 per cent.
Is a variable rate better than fixed in 2026?
It starts 0.94 points cheaper. On an average GTA mortgage it stays cheaper unless prime rises by more than about one point within the first year. Most bank forecasts are below that, though markets are pricing close to it.
How much does my payment change when the Bank of Canada moves?
About $13 to $14 a month for every $100,000 of mortgage, for each quarter-point change. On $794,728 that is roughly $107.
When is the next Bank of Canada rate decision?
October 28, 2026.
Can I switch from variable to fixed during the term?
Yes, with most lenders, at their fixed rate on the day you convert. There is usually no penalty.
Why is variable lower than fixed right now?
Fixed rates follow five-year government bond yields, which rose to around 3.35 per cent in September 2026 as investors began to expect rate increases. Variable rates follow the Bank of Canada’s rate, which has not moved. The gap is the market charging you today for hikes it expects later.
Buying in the GTA?
Run the payment on a specific home with our mortgage payment calculator, and add closing costs with the land transfer tax calculator. If you already own, a free home evaluation tells you how much equity you would bring to the next purchase. For local prices, see Brampton and Mississauga.
Sources and method
- Lender rates: Ratehub.ca, best 5-year variable and fixed mortgage rates, October 2, 2026.
- Bank of Canada decisions, inflation and bank forecasts: nesto, rate announcement coverage of September 2, 2026 and forecast page updated September 17, 2026.
- Prime rate history: WOWA.ca, Canada prime rate history.
- GTA average price: Toronto Regional Real Estate Board, Market Watch, August 2026.
- Payments calculated by Local Toronto on a 25-year amortization, with fixed rates compounded semi-annually and variable rates monthly.
Local Toronto is a real estate site, not a mortgage lender or broker. This page is general information, not mortgage advice. Rates and forecasts change, and the rate you are offered depends on your down payment, credit and property. HomeLife Landmark Realty Inc., Brokerage.