Sajid Karamally

Since 2022, Canadian borrowers have moved away from five-yr fixed mortgages toward one-to-four-yr fixed terms and variable products, increasing household exposure to interest-rate changes.
The housing agency's 2026 consumer survey found recent renewers reported avg. payment increases of $375 mo, and 35% said the change strained budgets.
Another 25% of mortgage consumers said they regretted the mortgage characteristics they chose, showing how a routine financing decision can create lasting strain.
Canada's mortgage system passes policy-rate changes to borrowers faster than long-term fixed markets, helping when rates fall but increasing exposure when they rise.
A 2026 industry report said shorter terms marked a break from Canada's traditional standard, and while renewals eased, many households still faced significant adjustments.

Canadian Borrowers Shift Toward Shorter Terms

By Mid-Q3 2026, Canada's 5-yr government bond yield reached the low-3% range, helping keep fixed mortgage rates elevated despite expectations from softer growth.
An expert linked the pressure mainly to inflation worries after oil prices rose, since bond investors demand better returns when future purchasing power looks weaker.
In Mid-Q3, Canada's 1-yr government yield hovered near high-2%, while the 5-yr sat >60 basis points higher, reflecting added compensation for longer-term risks.
The explanation also centered on heavy government borrowing and competition for investor capital, including corporate debt, which can force issuers to offer higher yields.
An expert said lower inflation, fewer expectations for rate hikes, and easing trade uncertainty could pull yields lower, though key drivers sit outside Canada's control.