TL;DR
Use this page to map your downside first: payment resilience, trigger exposure, and break flexibility. Then pick the mortgage structure that still works if rates stay higher for longer.
Prime-rate snapshot for February 24, 2026
On January 28, 2026, the Bank of Canada announced it maintained the policy rate at 2.25%. In the Bank of Canada posted-rates table, the chartered-bank prime series showed 4.45% through the latest posted weekly values (including February 18, 2026).
Why this matters: your variable mortgage is usually priced at prime +/- a spread. If prime changes, your mortgage cost changes, and depending on product structure, your payment may change too.
How prime and discounts really work
FCAC explains the basic mechanism clearly: lenders set prime, and variable mortgages are commonly quoted as prime plus or minus a discount. Example: if prime is 4.45% and your contract is prime -0.70%, your effective rate is 3.75%.
That spread matters more than many borrowers realize. Two borrowers can both have "variable" products but very different rate paths because of contract spread, payment type, and lender trigger rules.
Fixed-payment variable vs adjustable-payment variable
| Variable structure | What happens when rates rise | Main risk to watch |
|---|---|---|
| Fixed-payment variable | More payment shifts to interest, less to principal. Payment can later jump at trigger point. | Principal paydown slows, then payment shock risk increases. |
| Adjustable-payment variable | Payment changes as rates change, keeping amortization on track. | Monthly cash-flow volatility and budget pressure. |
FCAC also notes convertibility options may exist in some contracts, but fixed conversion rates can be higher than your current variable rate. Confirm in writing before relying on this as your backup plan.
Where trigger risk starts for real households
A trigger issue is not just a technical lender term. It is a budgeting event.
If your payment is not keeping up with interest cost, principal reduction can stall. At trigger point, lenders may require payment increases, lump-sum action, or other corrective steps based on contract terms.
Most expensive mistake: waiting until the trigger letter arrives before running scenarios.
Alternatives framework: if variable feels risky, use better options than panic
Borrowers usually frame this as variable vs fixed. Better decisions compare realistic alternatives:
- Alternative 1: short fixed term if stability is priority one for the next 12 to 36 months.
- Alternative 2: variable with adjustable payment if you want faster principal certainty and can absorb payment movement.
- Alternative 3: variable with written conversion trigger if you want flexibility but predefined lock criteria.
- Alternative 4: staged prepayment plan if you want to lower balance risk while preserving product choice.
The strongest choice is the one that survives an uncomfortable quarter, not a perfect quarter.
Decision psychology: four biases that hurt variable borrowers
- Anchoring: sticking to the first rate quote and ignoring payment-path risk.
- Availability bias: assuming recent rate calm means future calm.
- Present bias: overweighting todays payment relief and underweighting renewal stress.
- Regret aversion: delaying action because no option feels perfect.
Countermove: score each option on three criteria only: monthly resilience, break flexibility, and renewal leverage.
14-day prime-rate action plan
Days 1 to 3
confirm your exact variable contract type, spread, and lender trigger language.
Days 4 to 7
run base, stress, and trigger payment scenarios using your real monthly obligations.
Days 8 to 10
compare fixed and variable alternatives with break-penalty assumptions.
Days 11 to 14
lock your plan in writing: keep variable, convert, or move to another structure.
Best next step
If you currently have a variable mortgage, treat this as a planning window. Build your trigger-response plan now, before market pressure forces a rushed choice.
