Dibz5-year variable mortgage rates in Canada (2026): prime, payments, trigger rates
5-year variable mortgage rates in Canada: how prime sets them, fixed vs adjustable payments, trigger rates, penalties and a worked payment example.
A 5-year variable mortgage has a rate that moves with your lender's prime rate for five years, while the discount from prime stays the same. The Bank of Canada's estimated 5-year variable rate was 3.58% on October 1, 2026, about 0.87 points below the 4.45% prime rate. Its figures for loans actually advanced in July 2026 show new variable mortgages averaging 3.75% insured and 3.86% uninsured.
That's below the 4.05% insured average for 5-year-and-over fixed loans in the same month. Whether the gap is worth the uncertainty depends on how your payments work and how much movement you can absorb.
What a 5-year variable mortgage is
Your rate is written as prime plus or minus a set amount, for example "prime minus 0.85". The term is five years, the same as the standard fixed term. During those five years, your rate changes whenever the lender's prime rate changes; your discount from prime doesn't.
How variable rates are set
Variable rates start from prime, and each bank's prime follows the Bank of Canada's policy rate. When the Bank cuts its policy rate, banks usually lower prime by the same amount, often the same day. Lenders then compete on the discount they offer.
- Prime rate
- New uninsured variable
- New insured variable
- Estimated 5-year variable
Prime V80691311; estimated variable BROKER_AVERAGE_5YR_VRM (weekly); New-loan averages are the Bank of Canada's monthly average rates on residential mortgages advanced (series V122667776–V122667786), published about two months behind. Latest: prime 4.45% (Sep 30, 2026), estimated variable 3.58% (Oct 1, 2026).
Source: Bank of Canada (free at bankofcanada.ca)
Show the numbers
| Prime rate | New uninsured variable | New insured variable | Estimated 5-year variable | |
|---|---|---|---|---|
| Sep 2024 | 6.5% | 5.9% | 5.9% | 5.4% |
| Oct 2024 | 6% | 5.4% | 5.4% | 5% |
| Nov 2024 | 6% | 5.3% | 5.3% | 5% |
| Dec 2024 | 5.5% | 4.9% | 4.8% | 4.5% |
| Jan 2025 | 5.5% | 4.6% | 4.6% | 4.5% |
| Feb 2025 | 5.2% | 4.6% | 4.6% | 4.4% |
| Mar 2025 | 5% | 4.4% | 4.3% | 4.1% |
| Apr 2025 | 5% | 4.4% | 4.4% | 4.2% |
| May 2025 | 5% | 4.5% | 4.4% | 4.2% |
| Jun 2025 | 5% | 4.5% | 4.4% | 4.2% |
| Jul 2025 | 5% | 4.5% | 4.4% | 4.3% |
| Aug 2025 | 5% | 4.5% | 4.4% | 4.2% |
| Sep 2025 | 4.7% | 4.3% | 4.2% | 4% |
| Oct 2025 | 4.7% | 4% | 3.9% | 3.9% |
| Nov 2025 | 4.5% | 3.9% | 3.8% | 3.7% |
| Dec 2025 | 4.5% | 3.9% | 3.8% | 3.8% |
| Jan 2026 | 4.5% | 3.9% | 3.8% | 3.7% |
| Feb 2026 | 4.5% | 3.8% | 3.8% | 3.7% |
| Mar 2026 | 4.5% | 3.8% | 3.8% | 3.7% |
| Apr 2026 | 4.5% | 3.9% | 3.8% | 3.6% |
| May 2026 | 4.5% | 3.9% | 3.8% | 3.6% |
| Jun 2026 | 4.5% | 3.9% | 3.8% | 3.6% |
| Jul 2026 | 4.5% | 3.9% | 3.8% | 3.6% |
From September 2024 to November 2025, prime fell from 6.45% to 4.45%. The estimated variable rate dropped from 5.44% to 3.73% over the same stretch, and the insured new-loan variable average from 5.87% to 3.79%. Since then all three have been close to flat.
Two kinds of variable mortgage
Adjustable-rate (adjustable payment). When prime changes, your payment is recalculated so the loan still pays off on schedule. You feel every move right away, up or down.
Variable rate with fixed payments. Your payment stays the same; what changes is how it splits between interest and principal. If rates rise, more of each payment goes to interest and less to principal, so the loan takes longer to repay.
Trigger rates and trigger points
With fixed payments, there's a rate at which your payment covers only the interest, the trigger rate. Above it, the payment no longer covers the interest and the unpaid amount can be added to your balance. Lenders then typically require you to raise your payment, pay a lump sum or convert to a fixed rate. Many contracts also have a trigger point, often when the balance exceeds the original amount or a set share of the home's value, at which action is required.
On a $500,000 mortgage at 3.58% over 25 years, the payment is about $2,518 a month. In the first month, about $1,481 of that is interest. If the rate rose to 4.58%, interest would take about $1,890, leaving only $628 for principal. The trigger rate on that first-month balance would be roughly 6.12%, about 2.5 points above today's estimate. Exact trigger rates depend on your balance and the lender's compounding method.
Who a 5-year variable suits
- Borrowers with room in the budget to absorb higher payments (or a longer payoff) if rates rise.
- People who think rates are more likely to hold or fall than rise.
- Anyone who may need to break the mortgage early, since variable penalties are usually smaller.
Who it doesn't suit
- Households that need a predictable payment, especially with little savings to fall back on.
- Borrowers who would worry about every Bank of Canada announcement.
Posted vs actual, insured vs uninsured
The Bank of Canada doesn't publish a posted variable rate; its "estimated variable mortgage rate" (3.58% on October 1, 2026) is its own estimate of typical 5-year variable pricing. Actual new variable loans averaged 3.75% insured and 3.86% uninsured in July 2026. The insured–uninsured gap was small (0.11 points), and the new-loan variable figure covers all variable terms, not only five years.
Penalties, conversion and renewal
Breaking a variable mortgage usually costs three months' interest, not an interest rate differential, which makes it cheaper to exit than most fixed terms. On $500,000 at 3.58%, that's roughly $4,475. Many lenders also let you convert to a fixed rate mid-term at their then-current rates without a penalty.
At renewal you can switch lenders, and since November 2024 a straight switch generally doesn't require passing the stress test. For a new variable mortgage, you'll be qualified at the greater of your rate plus 2 points or 5.25%: 5.58% at a 3.58% rate, a payment of about $3,075 on $500,000.
Where rates have been
The longest series we hold is the chartered banks' posted 5-year fixed rate, back to 2006. It's a fixed-rate benchmark, but it shows how much borrowing costs have moved over a typical variable-rate borrower's lifetime:
Chartered banks' posted 5-year conventional mortgage rate (series V80691335). The Bank of Canada's variable-rate estimate only goes back to 2024 in the data we hold.
Source: Bank of Canada (free at bankofcanada.ca)
Show the numbers
| Month | Posted 5-year fixed |
|---|---|
| Dec 2006 | 6.45% |
| Dec 2007 | 7.54% |
| Dec 2008 | 6.75% |
| Dec 2009 | 5.49% |
| Dec 2010 | 5.19% |
| Dec 2011 | 5.29% |
| Dec 2012 | 5.24% |
| Dec 2013 | 5.34% |
| Dec 2014 | 4.79% |
| Dec 2015 | 4.64% |
| Dec 2016 | 4.64% |
| Dec 2017 | 4.99% |
| Dec 2018 | 5.34% |
| Dec 2019 | 5.19% |
| Dec 2020 | 4.79% |
| Dec 2021 | 4.79% |
| Dec 2022 | 6.49% |
| Dec 2023 | 7.04% |
| Dec 2024 | 6.49% |
| Dec 2025 | 6.09% |
| Oct 2026 | 6.19% |
Worked example: $500,000 over 25 years
| Rate | Monthly payment | Change vs 3.58% |
|---|---|---|
| 3.08% (−0.50) | $2,387 | −$131 |
| 3.33% (−0.25) | $2,452 | −$66 |
| 3.58% (estimated variable rate) | $2,518 | — |
| 3.83% (+0.25) | $2,584 | +$66 |
| 4.08% (+0.50) | $2,652 | +$134 |
| 4.58% (+1.00) | $2,790 | +$272 |
With an adjustable payment, each quarter-point move changes this payment by about $66. With a fixed payment, the payment stays at $2,518 and the payoff date moves instead. Figures use semi-annual compounding as an approximation; some lenders compound variable mortgages monthly.
Try our mortgage calculator to model rate changes on your own loan.
Related reading
Compare the 5-year fixed, the shorter 3-year variable, or a HELOC, which also moves with prime. Lender pages: RBC, TD, BMO, CIBC, Scotiabank, National Bank, Simplii Financial, Tangerine, Laurentian Bank.
FAQ
What is the average 5-year variable mortgage rate in Canada?
The Bank of Canada's estimated 5-year variable rate was 3.58% on October 1, 2026. Its figures for new variable mortgages advanced in July 2026 were 3.75% insured and 3.86% uninsured.
How does the Bank of Canada affect variable mortgage rates?
Banks set prime based on the Bank of Canada's policy rate, and variable mortgages are priced as prime plus or minus a fixed discount. When the policy rate changes, prime and variable rates usually follow within a day.
What is a trigger rate?
On a variable mortgage with fixed payments, it's the rate at which your payment covers only interest. Above it, the payment doesn't cover the interest and the lender will usually require a change. On $500,000 over 25 years at 3.58%, the trigger rate is roughly 6.12%.
What is the penalty for breaking a variable mortgage?
Usually three months' interest. On a $500,000 balance at 3.58%, that's about $4,475. Contracts vary, so the exact formula is in your mortgage terms.
Is variable cheaper than fixed right now?
On average, yes: in July 2026, new insured variable mortgages averaged 3.75% and new insured fixed loans of 5 years and over 4.05%. Whether variable ends up cheaper depends on where rates go over the term.
Rates shown are Bank of Canada averages, not offers. Talk to a licensed mortgage professional before choosing a term.
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