This week, the Bank of Canada decided it needed to make homeowners’ lives a little more expensive in the near term — ironically, to make our lives less expensive in the future.

It did that by jacking up floating interest rates by 25 basis points. For mortgages with 20 years remaining, for example, that adds roughly $13 a month to an adjustable-rate mortgage’s floating payment per $100,000 outstanding. Payment changes under most other amortizations differ by just a buck or so.

On a fixed-payment variable-rate mortgage, the amount stays put — unless a trigger rate is reached (which you don’t have to worry about right now) — but roughly $21 more goes  toward monthly interest instead of principal.

And the fun might just be getting started. With the central bank projecting inflation to hover around three per cent in 2027, forward rate pricing from CanDeal DNA suggests the market is bracing for three more hikes next year.

Never ones to let a good hike go to waste, several banks immediately bumped up not only their prime rates but their fixed rates too — despite the fact that fixed funding costs have been falling.

Some lenders do this knowing panicked borrowers will come sprinting through the doors to lock in after the first Bank of Canada hike.

If you’re one of these worried borrowers, carefully assess the math before signing any new mortgage. Locking in long-term after fixed rates have already shot up is not the right move for many.

Rates worth dating

For those shopping around for a new rate mate, the current lay of the land for leading national offers looks like this:

• Three-year fixed: 4.44 / 4.64 per cent (insured / uninsured)
• Five-year fixed: 4.44 / 4.84 per cent (insured / uninsured)
• Five-year variable: 3.55 / 3.90 per cent (insured / uninsured)

Dig into the regional rate tables and you’ll uncover even deeper fixed-rate discounts in certain provinces from players like local credit unions, Butler Mortgage and RateBuzz.

By the way, RateBuzz has an uninsured five-year fixed in Ontario and Alberta at a door-crasher deal of 4.30 per cent.

On the flip side, well-qualified borrowers with strong credit, income and assets hunting for a conventional variable rate should call a Big Six bank like RBC, CIBC, etc. Nobody beats the megabanks’ funding costs on uninsured variables, so see what kind of discretionary discount they’re willing to slide you under the table.

Given where the market expects rates to go — and the widening gap between fixed and variable pricing — floating your mortgage isn’t quite the high-wire act it was earlier this year when fixed rates were much cheaper.

Yet, for term-agnostic borrowers seeking the lowest potential borrowing cost, rate simulations at MortgageLogic.news (based on forward rates and the best current discounts) still give fixed rates the slight edge on paper.

Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

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