5-Year Variable Mortgage Rates

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Compare current 5-year variable mortgage rates from lenders across Canada. A 5-year variable mortgage gives you a mortgage rate that can move up or down during your term, based on your lender’s prime rate.

The rates shown above are for prime borrowers. To qualify for the lowest advertised rates, you generally need strong credit, stable income, and a mortgage that meets the lender’s conditions. Some of the lowest rates may be limited to insured mortgages, purchases, specific provinces, or borrowers with a certain down payment or mortgage amount.

5-Year Variable Mortgage in Canada: Full Guide

This Page's Content Was Last Updated: July 13, 2026

A 5-year variable mortgage is a mortgage with a 5-year term and an interest rate that can change during the term. The 5-year term is the length of your mortgage contract, while your amortization is the total time it would take to pay off the mortgage in full if payments continue as scheduled.

Most variable mortgage rates are tied to the lender’s prime rate. If the lender’s prime rate increases, your mortgage rate usually increases by the same amount. If the lender’s prime rate decreases, your mortgage rate usually decreases by the same amount.

For example:

The discount from the prime rate is set when you get the mortgage and stays the same for the term. The prime rate can change during the term.

5-year variable mortgage and a 5-year fixed mortgage can both be good options, but they work very differently.

A variable mortgage may make sense if the starting rate is meaningfully lower than a fixed rate and you are comfortable with the possibility that prime rates could rise. A fixed mortgage may be better if you want stable payments and do not want to worry about future Bank of Canada rate decisions.

Variable mortgage rates are closely tied to lender prime rates. Prime rates are influenced by the Bank of Canada’s policy rate, although each lender sets its own prime rate.

If your variable mortgage is Prime - 1.00% and your lender’s prime rate increases by 0.25 percentage points, your mortgage rate also increases by 0.25 percentage points. If the prime rate falls by 0.25 percentage points, your mortgage rate falls by the same amount.

What happens to your payment depends on whether you have a fixed-payment variable mortgage or an adjustable-rate mortgage.

If you have a $500,000 mortgage with a 25-year amortization, a 0.25 percentage point increase in your mortgage rate could increase your monthly mortgage payment by roughly $65 to $75, depending on your starting rate.

With an adjustable-payment mortgage, your payment changes when your rate changes. This keeps your mortgage on track to be paid off on time, but it makes your monthly budget less predictable.

With a fixed-payment variable mortgage, your payment stays the same when your rate changes. Instead, the split between the portion of your payment that goes towards either interest or the mortgage principal changes.

If rates rise, more of your payment goes toward interest, and less goes toward paying down the mortgage balance. If rates fall, less of your payment goes toward interest, and more goes toward principal.

In Canada, the terms “variable-rate mortgage” and “adjustable-rate mortgage” are sometimes used loosely, but they are not the same.

A fixed-payment variable mortgage can feel more stable because your payment may not change right away. However, rising rates slow down your mortgage repayment.

An adjustable-rate mortgage is more transparent because your payment changes as your rate changes. The downside is that your monthly payment can become harder to manage if rates rise.

A trigger rate is the interest rate at which your fixed mortgage payment is no longer enough to pay down any principal. At the trigger rate, your regular payment only covers interest.

Trigger rates usually apply to fixed-payment variable mortgages. They do not apply to adjustable-rate mortgages because adjustable payments change when rates change.

If rates rise above your trigger rate, your payment may not cover all the interest owing. When unpaid interest is added to your mortgage balance, this is called negative amortization. Instead of your mortgage balance going down, it can start to grow.

If you reach your trigger rate or trigger point, your lender will require you to take action. The exact options depend on your lender and mortgage contract, but common options include:

• Increasing your regular mortgage payment
• Making a lump-sum payment
• Switching from a variable rate to a fixed rate
• Refinancing your mortgage
• Paying enough to bring the mortgage back within the lender’s amortization limits

In some cases, your amortization may become longer because less of each payment is going toward principal. This can increase the total interest you pay over the life of the mortgage.

Before choosing a fixed-payment variable mortgage, ask your lender what your trigger rate is, how they calculate it, and what happens if your mortgage reaches it.

Trigger rates are not something most variable-rate borrowers experience in normal rate environments. They only become a concern when interest rates rise sharply, as happened in 2022-2023.

A 5-year variable mortgage may make sense if:

• You can handle payment increases or slower principal repayment
• You believe prime rates may fall or stay stable during your term
• The variable rate is meaningfully lower than comparable fixed rates
• You have room in your budget for rate changes
• You may sell, refinance, or break your mortgage before the end of the term, and you want the possibility of a lower penalty compared with a fixed-rate mortgage
• You understand your lender’s rules for converting to a fixed rate

A variable mortgage is not just a bet on lower rates. It is also a choice about risk, flexibility, and how much uncertainty you can comfortably manage.

Variable rates can be appealing when they offer a lower starting rate than fixed mortgages. However, they also come with risks.

Even if rates have stabilized or moved lower from recent peaks, future rate changes are not guaranteed. If Canadian inflation rises or economic conditions change, the Bank of Canada could raise rates again. That would increase variable mortgage rates.

If you have an adjustable-rate mortgage, your payment can rise whenever the prime rate rises. This can put pressure on your monthly budget.

If you have a fixed-payment variable mortgage and rates rise, more of your payment goes toward interest. You may pay down less principal than expected and may need higher payments later to get back on schedule.

If rates rise enough, your payment may no longer cover principal and could eventually stop covering all interest. This can lead to negative amortization and lender-required changes.

Many borrowers choose variable rates because they believe they can lock in later if rates rise. This may be possible, but it is not always as simple or cheap as it sounds.

Many lenders allow you to convert a variable-rate mortgage into a fixed-rate mortgage during your term. This is often called locking in.

However, locking in does not usually mean you get to choose any fixed rate available in the market. You are limited to your current lender’s fixed rates at the time of conversion. You may also need to choose a fixed term that is at least as long as the time remaining on your mortgage term.

For example, if you have three years left on your variable mortgage, your lender may require you to convert into a fixed term of three years or longer.

Before relying on the ability to lock in, ask your lender:

• Can I convert from variable to fixed at any time?
• Which fixed rates would I be eligible for?
• Would I receive the same rate as a new customer?
• Are there fees or restrictions?
• What fixed term would I need to choose?
• Would the new mortgage have different prepayment privileges or penalties?

Locking in can provide certainty, but it may not save money if fixed rates have already moved higher by the time you convert.

Just like fixed mortgages, variable rates also come in as open vs. closed mortgages. A closed variable mortgage has a lower rate than an open variable mortgage, but it limits how much you can prepay or pay off your mortgage early without a penalty.

An open variable mortgage gives you more freedom to repay the mortgage at any time, but the rate is higher. Open mortgages are generally used for short-term situations, such as when you expect to sell your home soon or pay off the mortgage in full.

Most borrowers choose closed mortgages because they offer lower rates. However, if you need flexibility, check the prepayment rules and penalties before choosing the lowest rate.

A capped variable mortgage has a maximum interest rate that your mortgage rate cannot exceed during the term. This gives you some protection if prime rates rise sharply. Current offerings available on the market include National Bank’s capped-rate mortgage. For three-year variable rates, another option is Scotiabank’s Scotia Ultimate Variable Rate Mortgage.

However, capped variable rates are not as common as regular variable mortgages. They may also start at a higher rate, and the cap may be much higher than the starting rate. Before choosing a capped variable mortgage, compare the starting rate, the cap, and the lender’s other mortgage features.

Historically, variable mortgage rates have often saved borrowers money compared with fixed rates, but this has not always been true. Variable rates performed well during long periods of stable or falling rates, including the low-rate period after the 2008 financial crisis and during the early COVID period.

The 2022 to 2023 rate-hike cycle showed the other side of variable-rate risk. Borrowers with variable mortgages saw their rates rise sharply, and some fixed-payment variable borrowers faced trigger-rate or negative-amortization concerns.

Since then, rate cuts have improved variable-rate affordability, but the lesson remains the same: variable rates can save money when rates fall, but they can also become expensive when rates rise.

Past performance does not guarantee future savings. A 5-year variable mortgage should be chosen because it fits your budget and risk tolerance, not just because variable rates have sometimes outperformed fixed rates in the past.

To get the best 5-year variable mortgage rate, compare offers from multiple lenders and look beyond the headline rate. It’s important to remember that you might not be able to get a low posted variable rate that you saw online, which may only be available for specific conditions, such as for insured high-ratio mortgages. A bank’s prime rate is also for the bank’s prime customers. If your financial situation isn’t great, such as if you have bad credit, then you may find that variable mortgage rates offered to you might be higher.

Your mortgage rate can depend on:

• Your credit score
• Your income and employment stability
• Your down payment
• Whether the mortgage is insured, insurable, or uninsured
• The property type and location
• Whether the mortgage is for a purchase, renewal, or refinance
• Your amortization period
• The size of your mortgage
• The lender’s current appetite for variable-rate mortgages

A mortgage broker may be able to help compare lenders, especially if your mortgage is not a standard insured purchase.

A very low variable mortgage rate can come with trade-offs. Before choosing the lowest rate, compare the full mortgage contract.

Important features to check include:

• Prepayment privileges
• Mortgage portability
• Penalty calculation
• Ability to convert to a fixed rate
• Restrictions on refinancing your mortgage
• Whether the mortgage is collateral or a standard charge
• Payment increase options
• Lump-sum payment options
• Customer service and online account access

A slightly higher rate may be worth it if the mortgage gives you better flexibility, lower penalties, or better prepayment options.

Your variable mortgage rate is directly influenced by the Bank of Canada rate. As a result, it's essential to understand why the Bank of Canada changes rates. In general, the Bank of Canada rate is a tool used to balance economic growth with inflation.

Lower interest rates allow homebuyers, consumers, and businesses to borrow more money to spend and invest cheaply. As a result, lower interest rates stimulate the economy because:

• More people buy homes
• Businesses invest in growth and hire more employees
• Consumers do more shopping

However, after prolonged periods of low interest rates, everything becomes more expensive. This is known as inflation, which increases the everyday cost of living. For example;

• Home prices increase due to higher demand
• Businesses increase the cost of their products
• Economic growth increases demand for oil, and gasoline prices

To cool down inflation, the Bank of Canada must increase interest rates to make the cost of borrowing more expensive. This increased rate will directly apply to your mortgage, and you'll pay more interest throughout your variable rate mortgage term. To summarize, interest rates are changed to influence economic growth and cool down inflation. This affects your variable mortgage rate.

A 5-year variable mortgage can offer savings and flexibility, but it comes with more uncertainty than a fixed mortgage. In 2026, borrowers should compare the actual discount from prime, understand whether payments are fixed or adjustable, and know what happens if rates rise.

Before choosing the lowest variable rate, check the mortgage’s restrictions, prepayment options, penalties, portability, and conversion rules. The best mortgage is not always the one with the lowest rate. It is the one that fits your budget, risk tolerance, and plans for the next five years.