If you took a 5-year fixed mortgage back in 2021, you probably felt like you’d won the lottery when you locked in a mortgage rate somewhere between 1.29% and 1.79%. It was essentially the era of “free money,” which was like rocket fuel for the housing boom.
Now fast-forward to 2026. Approximately 1.15 million Canadians have mortgages scheduled for renewal, and it’s not happening by accident. Back in 2021, the most popular term length was 5 years. Then, in 2023, the 3-year fixed became the most popular product by far. Put those two waves together, and you’ve got a bit of a perfect storm… with a huge number of Canadian households up for renewal at the same time.
While mortgage rates have substantially increased since their pandemic-driven lows in 2021, they have fallen substantially since their October 2023 peak, when mortgage rates were in the high 5% to mid-6% range.
Anyone renewing out of a 5-year fixed will be facing higher rates… and the higher “payment shock” that will come along with it. But this doesn’t mean you have to accept the higher payment! We can look at reducing your payment to keep it in line… or possibly even lower than what you’re used to paying, which I’ll discuss shortly.
If you’re renewing out of a 3-year fixed rate, then you’ll be converting to a lower rate… which will bring your payment down with it. Looking for an even lower payment? This may also be an option for you.
The difference between a financial headache and a smooth transition comes down to one thing: your strategy. More specifically, having a strategy before you fall into the bank trap of signing a passive renewal offer just because it showed up in the mail. So, how do you navigate the 2026 renewal wave without breaking the bank? Let’s dive in!
What are Today’s Lowest Mortgage Rates?
Let’s look at the numbers. We aren’t in 2021 anymore, but we aren’t in the peak-rate panic of 2023 either.
Below are the lowest mortgage rates in today’s market for owner-occupied properties:
- 5-Year Fixed: 3.89% to 4.29%.
- 5-Year Variable: Prime -1.05% to prime -0.75% (currently 3.40% to 3.75%)
- 3-Year Fixed: 3.94% to 4.14%
There is a pretty large range, particularly in the 5-year fixed and variable rates. The lower end of the range will apply mostly to purchases with less than a 20% down payment, therefore requiring default insurance from one of the three providers… CMHC, Sagen, or Canada Guaranty.
In some situations, we may be able to get the same rate or close for some mortgage renewals or uninsured purchases. But every situation is a bit different as I explain in detail in my blog on Why Different People are Quoted Different Rates
When to choose a 5-year fixed
5-year fixed mortgages are best suited to those who value stability with a lower rate locked in for a longer period. They are best suited to those with a lower tolerance for risk and who do not foresee moving or making any major lifestyle changes within the next 5 years.
When to choose a 3-year fixed
A few years ago, 3-year fixed rates became the most popular product as signs were all pointing at rates dropping over the next few years. Well, here we are. Some may still have the same mentality when choosing a 3-year term. But this time around, rates are expected to increase over the next few years. That’s what’s expected as of today, but as always, forecasts can and do change.
You can read more about this in my recent blog on 3-Year vs. 5-Year Fixed.
When to choose a variable rate mortgage
Variable rate mortgages are best suited to those with higher tolerances for risk and can stomach the strong likelihood of rates increasing over the next few years. All forecasts are pointing to increases from the Bank of Canada in 2027.
I would suggest reading my blogs on How to Choose Between a Fixed or Variable Rate Mortgage in 2026 and The Ultimate Guide To Choosing Fixed Vs. Variable
Strategy #1: The 120-Day Rule (Don’t Be a Procrastinator)
Life can get hectic at times, which makes it easier to put your mortgage renewal on the back burner until the last minute. Some people leave it too late to make the move to a different lender, or end up having to accept a higher rate due to promotions ending or to market rates increasing in general. Rates are relatively stable at the moment, but this can always change… and change quickly.
Checking your mortgage renewal date is probably lower on your to-do list than cleaning the gutters. But waiting until the last minute can be the fastest way to lose thousands.
Most lenders allow you to lock in a rate 120 days before your renewal (maturity) date. This is your insurance policy. If rates go up, you’re protected. If they go down, we can still get your rate lowered for you, or even move you to a different lender if needed. You get the best of both worlds.
Pro Tip: Your bank will likely send you a renewal letter in the mail. It looks official. It looks convenient. But it’s almost certainly not the best deal. While there are times when your current lender is competitive, there are usually better rates available. If it makes the most sense to renew with your current lender, we’ll be the first to advise you to take it. But it’s more likely that we can save you thousands by moving you to a different lender.
Strategy #2: To Switch or Not to Switch?
It’s not just about getting the lowest rate when you renew. It’s about finding the product that best suits your needs. This is why we ask a slew of questions before presenting you with your options:
- Do you plan on moving over the next 5 years?
- Are you planning any renovations?
- Are you interested in adding a HELOC? (Home Equity Line of Credit)
- What is most important to you… a lower rate or a lower payment?
Simply jumping on the lowest rate without considering your needs is a major mistake that many rate shoppers make. They become overly focused on securing the lowest mortgage rate on the market without taking the time to think about whether it actually suits their needs long term. This can prove to be extremely costly. Sure, you have a lower rate now… but this could also lead to a lighter pocketbook down the road if your goals do not align with your choice of mortgage product.
Don’t overthink it, though. That’s what we’re here for. We’ll discuss your situation with you in detail and we won’t just find the mortgage product best suited to your needs. We’ll find the one that positions you for maximum savings both now and in the future.
Strategy #3: Managing the “Payment Shock”
If you’re moving from a 1.7% rate to a 4.0% rate, your monthly payment is going up. There’s no sugar-coating it. But you have levers you can pull:
1. Lump-Sum Prepayments: If you’ve got some savings sitting in a low-interest account, throwing a lump sum at your mortgage before you renew can reduce your new monthly payment.
2. Extend Your Amortization: If cash flow is tight, you might consider extending your amortization back out to 25 or 30 years. It’ll cost you more in interest over the long run, but it can result in a significant reduction to your minimum mortgage payment. You can read more about this in my blog on The Benefits of 30 Year Amortization
3. The Variable Gamble: With variable rates currently sitting lower than your fixed options, they are starting to become popular once again. This leads to a lower starting payment. You just need to be prepared for rising rates (and often rising payments) over the term. I would recommend reading my blogs on Everything You Need To Know About Variable Rate Mortgages and Why Variable Rate Mortgages can be Misleading
Frequently Asked Questions (FAQ)
1. Will mortgage rates drop further in 2026?
While no one has a crystal ball, most forecasts suggest a period of relative stability with a slight downward bias. However, geopolitical events, like Trump’s tariffs, can throw a wrench in those plans. Cautious optimism is the name of the game.
2. Can I renew early without a penalty?
Usually, you can renew with your current lender about 4-6 months early without penalty. If you want to switch to a new lender early, you’ll likely face a prepayment penalty. We can calculate if the lower rate at the new lender “pays for” the penalty. If switching to a different lender, the move wouldn’t take place until your maturity date on your current mortgage.
3. What happens if I just sign the letter the bank sends me?
While you could end up with a decent rate, there are likely much lower rates available by switching to a different lender. Renewing with the same lender is essentially a “convenience tax.” By not shopping around, you could be leaving thousands on the table over the life of your mortgage.
4. Is the stress test still a thing in 2026?
Yes. While there have been tweaks to make transfers easier, the stress test remains the primary tool for Canadian regulators to ensure the system stays stable.
Final Thoughts
Your mortgage renewal is an opportunity to rework your mortgage to ensure it suits your needs moving forward and is the perfect time to discuss your options in detail. Whether you’re facing a payment increase or looking at a potential drop, the best move you can make is to explore your options.
At PMT Mortgage Corp., we treat you like family, and that means giving you the unbiased, “no-nonsense” advice you need to win. We’ve been ranked as a Top 75 Mortgage Broker in Canada every year since 2016 for a reason. We don’t just find you a rate; we provide a “WOW experience” that saves you time, stress, and, most importantly, money.
Don’t let your bank dictate your financial future. Grab your current mortgage statement, reach out to us today, and let’s build a strategy that puts you back in the driver’s seat. Reach out to us today and we’ll advise you on the lowest mortgage rates with products that are tailored to suit your specific needs.
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