Best Variable Mortgage Rates in Canada

Tied to prime

A variable mortgage’s interest rate moves with the lender’s prime rate, which itself moves with the Bank of Canada’s overnight policy rate. When the BoC cuts, variable holders pay less interest. When it hikes, they pay more.

Who picks it. Borrowers who believe rates will fall (or stay flat) over their term, who can comfortably absorb a payment increase if rates rise, and who want to capture the full benefit of cuts without waiting for renewal. Historically, variable has outperformed fixed over most 5-year windows in Canada, though “historically” isn’t a guarantee.

What drives the rate. Lender prime rate minus a discount (e.g., “Prime − 0.85%”). Lender prime moves in lockstep with the BoC overnight rate, which is set eight times per year on scheduled “rate decision” dates. The size of the discount is what brokers compete on; the prime side is identical across lenders.

Two flavours: variable-payment vs static-payment. A variable-rate, variable-payment mortgage adjusts your monthly payment when prime moves. A variable-rate, static-payment mortgage keeps the payment fixed but redirects more (or less) to interest as rates move, which can extend your effective amortization in a hike cycle. Confirm which one your lender offers; the difference matters.

When it’s the right choice. During or after a hiking cycle, when rates have likely peaked. When you have prepayment cushion (income that can absorb a 100bp+ payment increase without strain). When you’d rather pay a small fee to break the mortgage early. Variable penalties are typically just three months’ interest, far less than fixed IRD penalties.

When to consider alternatives. When you have no payment cushion. When the variable discount is small and prime rates are already low (limiting upside). When you simply value certainty more than expected savings.

How to read the table. Posted is the rate the lender publishes today; discounted is the bank’s own published special-offer rate, captured from the same page. Both move whenever the BoC moves. A mortgage broker can typically secure a rate below the bank’s published discounted rate. The “discount from prime” is what to compare across lenders, since prime itself is uniform.