Marion says long-end rates are near their peak and the 5-year fixed still looks attractive
With additional reporting by Fergal McAlinden
With the Bank of Canada’s October 28 rate decision, accompanied by a full Monetary Policy Report one week away, Stéfane Marion, chief economist at National Bank of Canada in Montréal, has offered Canada’s mortgage brokers a direct piece of advice: recommend the five-year fixed.
Marion made the case at the Mortgage Professionals Canada conference in Calgary on Wednesday, telling an audience of brokers and lenders that the country’s long-end rate cycle is approaching its ceiling — and that borrowers drifting toward shorter-term options may be underestimating the structural forces keeping rates elevated.
“It seems like mortgage holders are betting the house on short-term rates,” he said.
“In my forecast, I’d say, well, consider the 5-year rate because, you know, I think it’s attractive given what’s happening in the economy.”
His view runs against the current of the market. Variable-rate insured mortgages are running at approximately 3.79%, below the best five-year fixed insured rate of approximately 4.04%. That spread has driven a modest recovery in variable demand, with the variable-rate share climbing to 26% of the market, the first increase in three years, per a Mortgage Professionals Canada consumer survey conducted in February.
The case for caution
Marion argued the spread is misleading in the current environment. Geopolitical disruption, rising global defence spending, and an AI-driven electricity build-out are all exerting sustained upward pressure on long-term bond yields.
The Bank of Canada itself noted at its September 2 hold that “long-term bond yields have moved up globally, including in Canada” and signalled it was “prepared to adjust monetary policy as needed,” language that put an October hike back on the table.
Marion was direct about the Bank’s October 28 decision: “I don’t think that the Bank of Canada should be hiking next week, and if they do hike, they can’t be too aggressive.”
He added that he does not expect another 100 basis points of increase in mortgage rates, and that “most of the increase that we’ve seen in interest rates is behind us.”
Why the client conversation has changed
That reading reinforces what practitioners are already hearing. Leah Zlatkin, mortgage broker and LowestRates.ca expert, told Canadian Mortgage Professional in April that “most borrowers still prefer the certainty of fixed payments, especially after the sharp increases to variable rates during the Bank of Canada’s rate-hiking cycle in 2022 and 2023.”
The stakes are material. Mortgage delinquency balances rose 32% year-over-year nationally in the first quarter of 2026, and 52% in Ontario, according to Equifax Canada’s Q1 2026 Market Pulse report, a sign that renewal strain is already visible in the data.
With variable-rate market share climbing back to 26% even as delinquencies rise, broker demand and rate behaviour suggests the fixed-versus-variable conversation has rarely been more consequential.
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