The Bank of Canada held its policy rate at 2.25 percent on July 15, 2026, the sixth hold in a row. Prime has stayed at 4.45 percent since October 2025. Because of that pause, current mortgage rates Ottawa borrowers see have been unusually calm.
Insured 5 year fixed offers have been sitting close to 4 percent, while the sharpest variable options have been near 3.25 to 3.40 percent, with some lenders posting deals around 3.55 percent depending on the term and insurance status. That gap of roughly half a percent is the whole decision in one number.
Why the Two Rates Move Differently
Variable rates track prime, which tracks the Bank of Canada. Fixed rates track Government of Canada bond yields. Bond yields have stayed elevated through 2026 on energy prices and global uncertainty, which is why fixed pricing has not fallen even though the central bank stopped raising.
How a Fixed Rate Actually Works
Your rate is locked for the full term. Your payment does not change. Every payment splits between principal and interest on a schedule you can see the day you sign.
Who Fixed Suits Best
Choose fixed if your budget is tight, if you are stretching to buy your first home, if you sleep badly when the news mentions interest rates, or if you plan to stay put for the whole term.
The Fixed Rate Trap Most People Miss
Breaking a fixed mortgage early triggers an interest rate differential penalty. At a major bank that calculation uses posted rates and can run into five figures. Ask how the penalty is calculated before you sign, not after.
How a Variable Rate Actually Works
Your rate is quoted as prime minus a discount. With prime at 4.45 percent, prime minus 1.05 gives you 3.40 percent. When the Bank of Canada moves, your rate moves.
Two Types That Behave Differently
An adjustable rate mortgage changes your payment whenever prime changes. A standard variable rate mortgage keeps the payment the same and shifts how much goes to principal. The second type feels calmer but can hit a trigger rate if rates climb sharply.
The Penalty Advantage
Most variable mortgages charge only three months of interest to break. On a $500,000 balance that is a few thousand dollars instead of tens of thousands. If there is any chance you sell, refinance, or restructure mid term, that difference matters more than the starting rate.
Comparing the Two Side by Side
On a $550,000 mortgage over 25 years, a 4.00 percent fixed costs roughly $2,890 a month. At 3.40 percent variable the payment is closer to $2,715. That is about $175 a month, or $10,500 over five years, provided rates stay flat.
The question is whether they will. RBC expects the policy rate to hold at 2.25 percent through the end of 2026 before rising in 2027. BMO has forecast a hold through 2027. Nobody is promising cuts, so a variable holder today is betting mostly on stability rather than savings from falling rates.
The Options Between Fixed and Variable
Shorter Fixed Terms
Three year fixed pricing has often been close to or below the 5 year, which lets you lock in without committing until 2031. Many Ottawa borrowers are using this as a middle path.
Hybrid Mortgages
Some lenders split the balance, part fixed and part variable. You get partial protection and partial upside. Fewer lenders offer this, which is a good reason to work with a broker who can find them.
Convertible Variables
Most variable products let you lock into a fixed rate at any point without penalty. Confirm what rate you would be offered when you convert, because it is usually the lender’s current fixed pricing rather than a promised discount.
What Should Guide Your Choice
Ask four questions. How long will you keep this property? How much room does your budget have if the payment rose 15 percent? How likely are you to break the term early? How much does uncertainty actually bother you?
Run both scenarios on our mortgage tools and read our Ottawa mortgage rates 2026 guide for a deeper look at where pricing is heading.
Frequently Asked Questions
Is fixed or variable cheaper in Ottawa right now?
Variable is cheaper today by roughly half a percent. Fixed removes the risk that the advantage disappears. Bank Street Mortgage runs both payment scenarios so you can see the real dollar difference before choosing.
Can I switch from variable to fixed later?
Most variable mortgages allow a conversion to a fixed term at any time with no penalty. You accept whatever fixed rate the lender offers on the day you convert.
What happens to my variable rate if the Bank of Canada cuts?
Your rate falls by the same amount within a day or two, since lenders adjust prime immediately. A quarter point cut saves roughly $70 a month on a $500,000 balance.
Why is my fixed rate not falling when the central bank pauses?
Fixed pricing follows bond yields, not the overnight rate. Yields have stayed high through 2026, so fixed offers have barely moved.
Which term is most popular in Ontario?
The 5 year fixed remains the most common choice, though three year terms have gained ground while borrowers wait for clarity in 2027.
Do brokers get better pricing than banks?
Often yes. Ottawa mortgage brokers access lenders that do not operate branches, and those lenders compete on price. Bank Street Mortgage compares them all in one application.
The Right Rate Is the One You Can Live With for Five Years
There is no universal winner between fixed and variable, only a better fit for your situation. A buyer with a tight budget and a long horizon usually belongs in fixed. A homeowner who may sell in two years or wants penalty flexibility often belongs in variable.
The costly mistake is picking based on a headline number and ignoring the penalty terms, the prepayment privileges, and your own tolerance for surprises. Get both numbers on paper and the answer usually becomes obvious.
Want to see both options priced for your file? Talk to us and get the best mortgage rates Ottawa lenders will offer you.