Fixed vs. Variable Mortgages: What’s Best in 2026? 

The decision between a fixed or variable mortgage has always been a big one, but in 2026, it seems like it’s the question on everyone’s mind.

While interest rates are coming down, and we are in a somewhat “normal” range, they are higher than they were five years ago. Homeowners renewing need to weigh their options carefully, especially those in competitive markets like Canmore, Banff, and the Bow Valley.

What’s Happening with Interest Rates in 2026?

The Bank of Canada has kept their overnight lending rate steady so far this year at 2.25%. As of the latest update in April 2026, while we’re still battling inflationary pressures due to the price of oil, Canada’s GDP is still tracking inline with the Bank’s forecast. It’s likely that we won’t see any rate changes for at least the next couple months, if not into 2027.

Note: The Bank of Canada rate change only influences variable-rate mortgages. Fixed rates are influenced by the bond-market.

Fixed rates have been increasing as well, and it’s possible that they could continue. The war in Iran is impacting bond yields which is why many clients are moving to the “it” mortgage rate; variable.

Variable Rate Mortgages

With a variable-rate mortgage, your interest rate fluctuates based on the Bank of Canada’s overnight rate. This means your payments could increase or decrease over time. Historically, variable mortgages have led to savings when rates drop, but they also come with more uncertainty.

Pros:

• Typically lower starting rates than fixed mortgages.
• Potential for long-term savings if rates decrease.
• Lower penalties if you break your mortgage before the term ends.

Cons:

• Monthly payments could increase if rates rise.
• More difficult to budget in uncertain economic times.

Fixed Rate Mortgages

A fixed-rate mortgage means your interest rate stays the same for the duration of your term (typically 3 to 5 years). This option is appealing for buyers and homeowners who want predictability in their payments, especially in markets where home prices are already high.

Pros:

• Predictable monthly payments, no surprises.
• Protection from potential rate hikes.
• Easier budgeting, which is helpful for first-time buyers or investors.

Cons:

• Higher starting rate compared to some variable options
• If rates drop, you won’t benefit unless you refinance (which could cost you thousands in penalties depending on where you’re at in your term.

Which is Best for Buyers in Canmore and the Bow Valley?

For many buyers in Canmore and the Bow Valley, affordability is already a challenge. A fixed mortgage might be best for those who want certainty, especially in a high-priced market.

However, for buyers who can handle some risk, a variable mortgage could lead to long-term savings.

If you’re buying in Alberta or BC in 2026, your mortgage decision should be based on your financial comfort level and long-term goals.

Whether you choose fixed or variable, working with an experienced mortgage broker can help you navigate these choices and find the best option for your situation.

Still unsure which is right for you? Let’s chat. I’m happy to walk you through your options.