Laura Marchese
Key Mortgage Partners
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Lock In Or Stay Variable? What to Consider Before A Bank of Canada Announcement
October 22, 2026
If you have a variable-rate mortgage, you may be wondering whether now is the right time to lock into a fixed rate. With the next Bank of Canada interest rate announcement coming up on October 28, it’s a question many homeowners are asking.
There’s no one-size-fits-all answer. The right choice depends on your budget, your plans and how comfortable you are with your payment changing. Here’s what to think about, and a free tool to help you run the numbers.
Where Rates Stand Today
The Bank of Canada has held its policy rate at 2.25% at each of its recent announcements, most recently on September 2. At that meeting, the Bank said it was watching inflation risks from energy prices and tariffs closely, and that it was prepared to adjust rates if needed.
That uncertainty is why many variable-rate borrowers are taking a closer look at their options. No one can predict exactly what the Bank will do, but you can plan for different possibilities.
Reasons to Stay Variable
- Rates could stay steady or fall. If rates hold or drop, your variable rate does too.
- Lower penalties. If you need to break your mortgage early, a variable-rate penalty is usually three months’ interest, often much less than the penalty on a fixed rate.
- Flexibility. You can usually still lock in later if your situation or the market changes.
Reasons to Lock In
- Predictability. A fixed rate means your payment won’t change for the rest of your term, which makes budgeting easier.
- Protection if rates rise. If rates go up, a fixed rate shields you from higher payments.
- Peace of mind. If watching rate announcements causes you stress, certainty can be worth a lot.
Things to Check Before You Decide
- What fixed rate your lender will offer. Locking in is usually done at your lender’s current fixed rates, which may be higher than your variable rate today.
- The term you’ll need to choose. Many lenders require you to lock into a term at least as long as the time left on your current mortgage.
- Your plans. If you might sell, move or refinance in the next few years, the penalty on a fixed rate matters.
- Your budget. Could you comfortably handle a higher payment if rates rose?
Try Our Free Variable-Rate Mortgage Calculator
To make this decision easier, we’ve created a free calculator. Use it to:
- Compare your payments if you stay variable or lock into a fixed rate
- See how rising, falling or unchanged rates could affect your payments
- Understand the trade-offs before you make a decision
Have Questions About Your Results?
We’re happy to walk you through the numbers. We can review your current mortgage, check what your lender is offering, and help you decide whether locking in or staying variable makes sense for you. It’s free, with no obligation.
Contact us to talk through your options.
This article is for general information only and isn’t financial advice. Rates, terms and lock-in options vary by lender.
Smart Advice - IRD Penalties
December 13, 2024
Payout penalties in Canada for fixed mortgages are typically IRD or 3 months interest, whichever is greater. But IRD calculations and outcomes can vary greatly.
Know the difference between lenders.
Take this example: Lender A has offered you 0.10% lower than Lender B. But Lender A uses discounted rates. Let's look at the math on what that lower rate could mean later if you break your mortgage in two years.
Let's compare:
- Have a slightly lower payment with Lender A and save about $1,000 in interest over the two years.
- But when you need to break your mortgage, the penalty costs $25k+ higher
- You wanted to break the mortgage to take advantage of lower rates. However, due to the high penalty, it doesn't make sense to break your term. You are forced to stay with Lender A.
- At the end of the term with Lender A, you will end up with higher interest costs + higher payments for the last 3 years of the term.
Knowing the difference between lenders is key to paying the least amount of interest for your mortgage!
Reach out to us and we will be sure to review the best options for your situation!
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