Is a fixed or variable mortgage better in Canada right now?

A fixed mortgage locks your rate and payment for the term, and its break penalty is calculated with the interest rate differential — which can be very expensive if you break early while rates are lower.

A variable mortgage is priced as prime minus a discount. Payments (or the share going to principal) change as prime moves, but the break penalty is normally capped at three months' interest, which matters if you may sell or refinance.

Practical rule: choose fixed if a payment increase would strain your budget or you want to sleep at night; choose variable if you have room to absorb increases, expect to move within the term, or believe rates fall faster than the forward curve implies. Short 2–3 year fixed terms are a common middle ground.