Variable rates are cheaper than fixed. Canadians still aren't biting.

Here is the puzzle sitting in the middle of Canada's mortgage market right now. 

The Bank of Canada's policy rate is at 2.25 per cent — a full 275 basis points below its June 2024 peak. Variable-rate insured mortgages are going out at an average of 3.79 per cent, per Statistics Canada's April 2026 figures. The best five-year fixed insured rate, per Ratehub.ca, is around 4.04 per cent. Variable is cheaper. The spread is real. The numbers haven't looked this good for variable in years. 

And yet total variable mortgage funds advanced by chartered banks were basically flat year-over-year in April 2026 — $19.2 billion, down a hair from $19.4 billion in April 2025, a -0.8 per cent change. Open variable mortgages dropped 12.1 per cent to $691 million. The group of Canadians who look at a variable mortgage and actually choose it hasn't grown much in twelve months, even as the cost advantage of doing so has widened. 

For brokers trying to have this conversation with clients in 2026, the data is worth understanding. 

What the numbers actually show 

The year-over-year comparison only tells part of the story — you need to zoom out two years to see what's really going on. Back in April 2024, total variable mortgage funds advanced were just $3.1 billion, a near-historic low, after the Bank of Canada's hiking cycle had pushed uninsured variable rates to 6.84 per cent. Then came the cuts. By April 2025, variable lending had surged to $19.4 billion — more than five times the level of two years earlier. 

So the most recent data isn't showing a collapse. It's showing a plateau. The initial rush as rates fell has run its course. The holdout borrower — the one who's been watching and waiting, not quite convinced — is still on the fence. 

The rate data backs this up. The uninsured variable rate went from 6.84 per cent in April 2024 to 4.42 per cent by April 2025, and now sits at 3.88 per cent — a 296-basis-point drop over two years. That decline drove the initial surge. The more recent move — from 4.42 per cent to 3.88 per cent over the past year, another 54 basis points — hasn't moved the needle on volume at all. At some point, more incremental rate cuts stop changing minds. 

The trauma argument 

The most honest explanation for the plateau is psychological, not mathematical. As Canadian Mortgage Professional has documented, the 2022 and 2023 rate hiking cycle genuinely hurt variable-rate borrowers. Those with adjustable-rate mortgages saw their payments spike by hundreds of dollars, sometimes in a matter of months. That wasn't abstract for a lot of people — it showed up in household budgets, in difficult client conversations, and in the OSFI arrears data through 2023 and 2024. 

Leah Zlatkin, mortgage broker and expert at LowestRates.ca, put it plainly in an April 2026 interview with Canadian Mortgage Professional: "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." That preference makes sense. It's not irrational — it reflects something a lot of Canadians lived through recently. 

Victor Tran at Rates.ca reported earlier this year that variable-rate quotes had climbed from around 7 per cent of total inquiries in 2024 to roughly 26 per cent by January 2026 — a real gain in interest, but fixed still dominated at over 70 per cent of quotes. "We're seeing more borrowers take a closer look at variable rates than we did a year ago," Tran said. "As the Bank of Canada lowered rates through 2025, variable mortgages became more attractive and interest picked up. Even so, most households are still opting for fixed because it offers predictability in an environment where rate direction isn't guaranteed." More looking, not much more buying. 

The rate ceiling problem 

There's a second factor here that the psychology argument alone doesn't cover: the rate outlook. 

The Bank of Canada held its policy rate at 2.25 per cent for the fifth time running at its June meeting, as CMP reported, with 89 per cent of brokers surveyed expecting exactly that. The Bank has been pretty clear it thinks rates are about right. BMO Capital Markets senior economist Sal Guatieri said it plainly in January: "the easing cycle is probably over." 

If the cutting cycle really has ended — and with geopolitical pressure from the Iran conflict and elevated oil prices, there's even some talk of modest hikes in late 2026 or 2027 — then choosing variable today isn't riding a wave of further cuts. It's accepting rate risk at what might be the floor of the cycle, without much prospect of reward for taking that risk. That's a very different calculation than mid-2024, when going variable meant capturing most of a 275-basis-point cutting cycle. RBC Economics puts it similarly: variable rates are likely to sit where they are for the rest of 2026. 

Zlatkin made the point to her clients directly: "Variable rates come with uncertainty. Borrowers need to be comfortable with the possibility that rates could move higher again depending on how the economic environment evolves." 

The broker conversation that matters 

For brokers, the variable rate plateau doesn't have a clean answer. The math still points toward variable. The psychology points away from it. And the rate outlook doesn't give a clear direction for the next twelve to eighteen months. 

What the data is really telling brokers is that the variable conversation in 2026 isn't about overcoming a misunderstanding — it's about helping a client honestly assess their own risk tolerance against a genuinely uncertain outcome. A borrower who went variable in mid-2024 at 6.84 per cent and is now at 3.88 per cent has come out ahead. A borrower who picks variable today at 3.88 per cent and faces even a 50-basis-point increase in the next eighteen months will wish they'd chosen differently. 

The flat volume numbers aren't evidence of a market making a mistake. They're evidence of Canadians applying — consciously or not — a real and recent memory of what variable rates can do. Brokers who acknowledge that honestly, rather than just pointing to the current spread, are the ones whose variable-rate clients won't be calling them frustrated two years from now. 

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