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).
On your path, variable saves$10,015of interest over 5 years vs 5.14% fixed
- 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
What this can't tell youNobody knows where prime goes. The break-even tells you how much rates must rise before fixed wins, so you can judge whether you'd sleep at night with variable. Variable penalties are usually three months' interest; fixed penalties can be much larger.
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 .
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