Should I choose a variable or fixed mortgage rate in Ontario?

Fixed-rate mortgages lock in your interest rate for the full term, giving you predictable payments regardless of what the Bank of Canada does with its key rate. This certainty comes at a cost: fixed rates are generally higher than variable rates when you first sign, because the lender is pricing in the risk of rate changes.

Variable-rate mortgages are tied to the lender's prime rate, which moves with the Bank of Canada's overnight rate. Historically, variable rates have often worked out cheaper over full cycles, but you take on the risk of payment increases if rates rise. Some variable products keep your payment fixed and adjust the amortization instead; others adjust payments directly.

Which is better depends on your budget flexibility, risk tolerance, and outlook. If a rate increase would strain your finances, a fixed rate may offer more security. If you have room in your budget to absorb increases and believe rates will fall or stay flat, a variable rate can save money. Both have their place depending on the market environment. A mortgage broker can model current scenarios and break-even points to help you decide based on your personal situation.