MORTGAGE RATES – Understanding the difference between variable and adjustable rate mortgages is becoming crucial for Airdrie residents managing monthly cash flows.
Fixed or variable. It is one of the most common questions homeowners ask, and one of the most misunderstood. The answer in today’s environment is not the same answer it was two years ago, or even six months ago. For homeowners in Airdrie and surrounding communities making this decision today, the current environment is genuinely different than the one their friends or neighbours navigated in 2022 or 2023.
For a long stretch, the assumption has been that variable-rate mortgages carry more risk and fixed-rate mortgages offer more security. That framing is not wrong, but it is also not the full picture. The right answer depends on where rates sit today, what is driving them, and how your plans line up with the term ahead.
Right now, variable rates are sitting meaningfully lower than fixed rates for many borrowers. The spread between the two is at the wider end of the typical range, which changes the conversation. The traditional argument for variable, that it offers a lower starting rate with the potential for cuts ahead, holds true today even though the rate environment looks very different from it did during the cutting cycles of recent years.
To understand why fixed rates are priced where they are, it helps to look at what drives them. Fixed mortgage rates in Canada are largely tied to the Canada 5-Year Bond Yield. When bond yields move, fixed rates tend to follow. Bond yields have been relatively stable through 2026, which is why fixed rates have not moved dramatically in either direction. Lenders add a spread above the bond yield, which is how the rates you see today are built.
Variable rates work differently. They move with the Bank of Canada’s policy rate, which is currently on hold. Current expectations suggest the Bank is likely to hold steady in the near term, which means variable rates are not expected to move significantly in the months ahead. That stability changes the risk conversation. Variable is no longer a bet on aggressive rate cuts, but it is also not a bet against further hikes in the current outlook.
It is also worth understanding the difference between a variable-rate mortgage and an adjustable-rate mortgage. Both move with prime, but they behave differently when rates change, and the key difference can impact your amortization. With a variable-rate mortgage, the payment generally stays the same when prime moves. More or less of each payment goes toward interest versus principal, which means your amortization can extend or shorten depending on the direction rates take. With an adjustable-rate mortgage, the payment itself adjusts up or down to reflect the new rate, which keeps your amortization on track but shifts your monthly cash flow instead.
For example, on a $500,000 mortgage at a starting rate of 4.20 percent over a 25 year amortization, the monthly payment would be $2,684.59. If prime increases by 0.25 percent during the term, the variable rate borrower would continue to pay $2,684.59 per month, but more of that payment would go toward interest. The amortization would extend, meaning the mortgage takes longer to pay off. The adjustable rate borrower would see their payment rise to $2,753.48 per month, but the amortization would stay on schedule. Same rate change, two different outcomes. Use our compare mortgage calculator to see how the options look side by side.
None of this means one option is universally better than the other. Fixed gives you payment certainty for the full term. Variable and adjustable offer a lower starting rate today and flexibility if plans change, including typically smaller penalty calculations if the mortgage is broken early. The right choice depends on your timeline, your plans, and how comfortable you are with the possibility of payment movement over the term.
The real question is not fixed or variable. It is which structure fits where you are headed. A homeowner planning to stay in place for the next five years may approach this very differently than one expecting a move, a refinance, or a major life change in the next two. Learn more about finding the right solution.
This decision often comes up at renewal time as well, where the structure you choose now shapes how the mortgage will function over the years ahead. Learn more about mortgage renewals.
Having the right conversation matters. Rate is one piece of a larger picture, and in today’s environment it may not be the deciding factor.
Rates can vary depending on how the mortgage is structured and what you are trying to accomplish.
Here are some rates for the week of June 8, 2026:
Fixed Rates
3 Year Fixed: 4.39% to 4.84%
4 Year Fixed: 4.49% to 4.84%
5 Year Fixed: 4.49% to 4.84%
Variable or Adjustable Rate Mortgages
3 Year Variable or Adjustable: Prime minus 0.55% to Prime minus 0.05%
5 Year Variable or Adjustable: Prime minus 0.75% to Prime minus 0.25%
Mortgage rates provided by:
DeRosa Mortgage Team powered by Indi Mortgage
Learn More Here
Lower rates are typically available on insured or lower loan-to-value mortgages, while higher rates may apply to more leveraged or conventional scenarios.
Shannon DeRosa is a Sr. Mortgage Broker with the DeRosa Mortgage Team powered by Indi Mortgage, serving Airdrie and surrounding communities. This article is for information purposes only. It is not written by and does not necessarily reflect the views of the editorial staff. Always check with your local lending company to verify the rates that are available to you.