Variable still cheaper than fixed snapshot

Five-year variable mortgages are still showing up below five-year fixed offers in Canada’s broker market in mid-April, with the gap running roughly 30 to 50 basis points. (pegasuslending.com) A broker comparison published by Pegasus Lending lists the best five-year variable rates around 3.30% to 3.45%, versus about 3.74% to 3.80% for five-year fixed. The firm presents the figures as marketplace offers, not the posted rates advertised by the biggest banks. (pegasuslending.com) That split lines up with how Canadian mortgages are priced. Variable rates move with lenders’ prime rates, which are influenced by the Bank of Canada’s overnight rate, while fixed mortgages are tied more closely to bond markets, especially Government of Canada five-year yields. (bankofcanada.ca 1) (bankofcanada.ca 2) The Bank of Canada held its policy rate at 2.25% on March 18, 2026, and its next scheduled rate decision is April 29, 2026. That leaves borrowers comparing today’s discount on floating rates against the risk that cuts arrive later than markets expect. (bankofcanada.ca 1) (bankofcanada.ca 2) Fixed rates can stay higher even when the central bank pauses, because bond yields move on inflation and growth expectations rather than on the overnight rate alone. The Bank of Canada says its benchmark bond yields are based on actual mid-market closing yields of selected Government of Canada issues in each term bucket. (bankofcanada.ca 1) (bankofcanada.ca 2) The spread also does not mean every borrower will get the headline rate. CMHC says insured borrowers often receive lower rates, and insurance is generally required when the down payment is under 20% on homes priced at $1.5 million or less. (cmhc-schl.gc.ca) (cmhc-schl.gc.ca) Borrowers also still face Canada’s mortgage stress test. The Office of the Superintendent of Financial Institutions says uninsured borrowers must qualify at the greater of their contract rate plus 2 percentage points or 5.25%, which means a 3.30% mortgage is tested at 5.30% and a 3.80% mortgage at 5.80%. (osfi-bsif.gc.ca) On a $500,000 mortgage amortized over 25 years, the payment difference between 3.30% and 3.80% is only about $11 a month using standard amortization math. The bigger distinction is not the starting payment but whether the borrower wants certainty for five years or is willing to ride future rate moves. (bankofcanada.ca) (cmhc-schl.gc.ca) For now, the snapshot says the market is still charging less for flexibility than for certainty. The next Bank of Canada decision on April 29 will show whether that bet still holds. (pegasuslending.com) (bankofcanada.ca)