Fixed vs variable mortgage calculator: the break-even
Variable beats fixed unless prime rises far enough. This calculator runs your variable rate through Bank of Canada moves on the real announcement dates and finds the move that makes both cost the same. With 4.50% fixed and 4.00% variable on $500,000, it takes 2 quarter-point hikes for variable to lose.
Fixed vs variable: what would make variable lose?
Variable follows prime through the moves you choose, on the Bank of Canada's real announcement dates (next: Dec 9, 2026).
- Break-even move in prime
- +0.89 pts
- for the whole term
- Quarter-point hikes to lose
- 4
- Fixed payment
- $2,948.00
- Variable payment, end of term
- $2,835.28
Estimate, not advice. Educational estimate only, not financial, mortgage, tax or legal advice. Lenders, insurers and governments set their own rules and can change them; confirm with a licensed professional before you decide.
Variable saves $10,015 vs fixed over 5 years on this path. Break-even prime move 0.89%.
Show the numbers
| Fixed | Variable | |
|---|---|---|
| Year 1 | 5.14% | 4.60% |
| Year 2 | 5.14% | 4.70% |
| Year 3 | 5.14% | 4.70% |
| Year 4 | 5.14% | 4.70% |
| Year 5 | 5.14% | 4.70% |
What is driving this result
- Today the variable rate is 0.94% points below fixed. Fixed costs $120,385 of interest over 5 years; variable on your path costs $110,370.
- Break-even: variable costs the same as fixed if prime averages 0.89% points higher than today for the whole term, starting now.
- On the Bank of Canada's announcement calendar, 4 quarter-point hikes at the next 4 scheduled decisions would make variable cost more than fixed.
- Your variable payment starts at $2,694.71 and ends the term at $2,835.28; the fixed payment stays $2,948.00.
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Track every decision on the Bank of Canada tracker. See how fixed rates follow bond yields in rate history.
Assumptions & sources
Assumptions
- Fixed: level payment, semi-annual compounding. Variable: monthly compounding, payment recalculated every month on the remaining amortization (adjustable payment). Fixed-payment variables move the same cost into the balance.
- Prime moves by the same amount as the Bank of Canada's policy rate on announcement dates, effective the next day. Lenders set their own prime; historically the big banks have moved prime with the policy rate.
- Interest compares the term only; the balance left at renewal is shown in the CSV.
Sources
- Bank of Canada — 2026 schedule for policy interest rate announcements. Checked .
- Bank of Canada — 2027 schedule for policy interest rate announcements (effective July 27, 2026). Checked .
- Bank of Canada — Policy interest rate. Checked .
- Bank of Canada — Prime rate (chartered banks, typical): derived from the Oct 29 policy decision (policy 2.50% + 2.20); Bank of Canada weekly series pending (last observation 4.45% on 2026-10-28, series V80691311) (effective October 29, 2026). Checked .
- Financial Consumer Agency of Canada — When interest rates rise. Checked .
How it works
Fixed: one payment for the term, semi-annual compounding. Variable: the rate changes the day after each Bank of Canada announcement you choose to move, and the payment is recalculated each month on the remaining amortization. We add up the interest each pays over the term; the break-even is found by searching for the single permanent change in prime that makes the two totals equal.
Worked example
| Scenario | Interest over 5 years |
|---|---|
| Fixed at 4.50% | $105,024 |
| Variable at 4.00%, prime never moves | $93,874 |
| Break-even: prime averages 0.46% points higher all term | $105,024 |
| Mortgage | $500,000, 25 years, 5-year term |
|---|---|
| Fixed / variable | 4.50% / 4.00%illustrative |
| Fixed interest | $105,024 |
| Variable interest, prime holds | $93,874 |
| Break-even prime move | +0.46 pointsfor the whole term |
Frequently asked questions
When does a variable rate cost more than fixed?
When prime rises enough, for long enough. With $500,000 over 25 years, 4.50% fixed vs 4.00% variable, variable costs the same as fixed over 5 years if prime averages 0.46% points higher than today for the whole term. Rises late in the term matter less than early ones.
Do variable payments change when the Bank of Canada moves?
With an adjustable-rate mortgage, yes: the payment changes when prime changes. With a fixed-payment variable mortgage, the payment stays the same and more or less of it goes to interest; if rates rise far enough you can hit a trigger point and the lender will ask you to pay more.
Is the penalty different for variable?
Usually. Variable-rate mortgages normally charge three months' interest to break; fixed-rate mortgages charge the greater of three months' interest and the IRD, which can be much larger.
Primary sources
- Bank of Canada — 2026 schedule for policy interest rate announcements. Checked .
- Bank of Canada — 2027 schedule for policy interest rate announcements (effective July 27, 2026). Checked .
- Bank of Canada — Policy interest rate. Checked .
- Financial Consumer Agency of Canada — When interest rates rise. Checked .