TL;DR
Use this guide to separate what you can control from what you cannot. Then choose the rate strategy that protects both affordability and flexibility.
Rate reality check for February 24, 2026
On January 28, 2026, the Bank of Canada announced it maintained the policy rate at 2.25%. In the Bank's posted chartered-bank table, the prime series (V80691311) showed 4.45% in the latest weekly values including February 18, 2026.
This gives borrowers a practical baseline: policy rate signals monetary direction, while lender prime and product pricing shape what you actually pay.
How lenders set your mortgage rate
FCAC states that lenders set mortgage rates and evaluate several factors, including current prime and posted rates, whether you qualify for a discount, the type of interest (fixed/variable/combination), and your credit profile.
Translation for borrowers: the same market can produce different rates depending on your scenario quality and product fit.
Prime, posted, and discounted rates: what each one means
- Prime rate: often used as the anchor for variable mortgage pricing (prime +/- spread).
- Posted rate: lender-advertised rate used as a reference point in some pricing and penalty contexts.
- Discounted/contract rate: the effective rate you qualify for based on your file and lender policy.
Most borrowers over-focus on posted rates and under-focus on contract structure and downside costs. That creates expensive surprises later.
Fixed, variable, and hybrid: rate types with different risks
| Rate type | What usually improves | What usually gets harder |
|---|---|---|
| Fixed | Payment certainty for the term. | Potentially higher break penalties if plans change early. |
| Variable (fixed payment) | Often lower starting cost and flexibility. | Trigger-point and interest-share risk when rates rise. |
| Variable (adjustable payment) | Cleaner principal path as rates move. | Monthly payment volatility. |
| Hybrid / combination | Blended risk profile across fixed and variable slices. | More complexity to manage and evaluate at renewal. |
FCAC also notes that with variable mortgages using fixed payments, rising rates can shift more of each payment toward interest, and trigger-point provisions can require payment changes.
Qualification still matters: the stress-test layer
OSFI's current minimum qualifying rate for uninsured mortgages remains the greater of contract rate + 2% or 5.25%. This affects what you can qualify for even when your expected payment appears manageable.
Practical implication: affordability planning must include both actual payment and qualifying-rate constraints.
Alternatives framework: do not force one rate path
When borrowers feel uncertain, they often freeze between fixed and variable. Use alternatives instead:
- Alternative 1: short fixed term for near-term certainty with less long lock-in.
- Alternative 2: variable with written conversion trigger for flexibility with guardrails.
- Alternative 3: hybrid structure for balanced exposure when one-way bets feel unsafe.
- Alternative 4: staged prepayment plan to improve resilience before renewal.
The best mortgage is not the cheapest quote today. It is the strategy that still works when life changes.
Behavior traps that drive bad rate decisions
- Anchoring: over-valuing the first rate seen.
- Present bias: chasing the lowest immediate payment while ignoring medium-term risk.
- Status-quo bias: accepting renewal defaults without comparison.
- Regret aversion: delaying action until options narrow under deadline pressure.
Countermove: decide from a written scorecard with pass/fail thresholds for payment resilience, flexibility, and total cost.
21-day rate decision sprint
Days 1 to 7
gather your full profile, payment limits, and likely hold period.
Days 8 to 14
compare fixed, variable, and hybrid scenarios with realistic downside assumptions.
Days 15 to 21
select strategy, confirm contract details in writing, and set renewal review checkpoints.
Best next step
If you are shopping now, start with your payment-risk model before asking for final quotes. It will save time and usually improves both lender fit and confidence.
