If your mortgage comes up for renewal in the next twelve months, you have probably noticed that the conversation has changed. For most of 2025 and the first half of 2026 the question was how far rates might fall. On October 28, 2026 the Bank of Canada raised its policy rate to 2.50%, said it expects inflation to average about 3% in 2027, and noted that further increases may be needed. That does not tell you what your renewal rate will be. It does tell you that the easy assumption of “wait and it will get cheaper” no longer holds.
Across Clarington, a large share of households bought or refinanced in 2020–2022 at rates that will not be on offer again soon. Many of those five-year terms mature in 2026 and 2027. The decision in front of you is not just fixed or variable. It is how this mortgage fits with everything else you are trying to do with your money over the next five years. This guide walks through the pieces we look at with clients in Bowmanville, Newcastle and Courtice before anyone signs.
What the October 2026 rate decision does and does not mean
The Bank of Canada sets the overnight rate. Variable-rate mortgages and lines of credit move with it almost immediately, because lenders price them off prime. Fixed rates are different: they follow Government of Canada bond yields, which move on what markets expect to happen over the next several years, not on what the Bank did last week. So the October increase pushed variable rates up on the day; fixed rates had already been drifting with bond yields for weeks beforehand.
The practical reading is this. The Bank is signalling that inflation is proving sticky and that it is prepared to tighten further if needed. That is a reason to take the “variable will always win” argument less for granted than it was in 2024 and 2025. It is not, on its own, a reason to lock in for five years at any price.
Fixed: what you are actually buying
A fixed rate buys certainty of payment for the term. In exchange you accept two things. First, if rates fall during the term, you keep paying the higher rate unless you break the mortgage. Second, the penalty for breaking a fixed mortgage is usually the greater of three months’ interest or the interest rate differential, and the IRD can be substantial if rates have dropped since you signed. Ask your lender to show the penalty calculation in writing before you commit; the method differs between big banks and monoline lenders, and that difference matters more than a few basis points of rate.
Fixed suits households where the payment has to be known: a retirement that starts within the term, one income, a renovation budget already committed, or simply a temperament that does not want to watch the Bank of Canada calendar.
Variable: what you are actually buying
A variable rate is usually priced below fixed at the start of a term and moves with prime. There are two kinds. An adjustable-payment variable changes your payment every time prime changes. A fixed-payment variable keeps the payment the same and adjusts how much of it goes to interest; if rates rise enough, you can reach a “trigger rate” where the payment no longer covers interest and the lender asks for more. Many Ontario borrowers learned the second kind the hard way in 2022–2023.
Variable suits households with room in the budget to absorb a higher payment, a plan to pay the mortgage down aggressively, or a reasonable chance of selling or refinancing within the term, because the penalty is normally just three months’ interest.
Short fixed and hybrid options
Two options often get overlooked. A one-, two- or three-year fixed term gives you payment certainty while you wait for a clearer picture without locking in for five years. A hybrid mortgage splits the balance, say half fixed and half variable, which hedges the decision rather than making a single bet. Neither is right for everyone, but both deserve a spot on the comparison sheet.
Switching lenders at renewal: what changed
Many homeowners assume they must stay with their current lender because they would have to re-qualify under the mortgage stress test at a higher rate. For uninsured mortgages, OSFI confirmed that a straight switch to a new lender at renewal — same amortization, same loan amount — is not subject to the minimum qualifying rate, effective November 21, 2024. OSFI’s minimum qualifying rate for uninsured mortgages remains the greater of the contract rate plus 2% or 5.25%, but it applies to new borrowing and refinances, not to a straight switch.
That makes the renewal letter a starting point, not a final offer. Lenders know a portion of borrowers will sign whatever arrives in the mail. Shopping the renewal, or having a mortgage agent do it, is the single most reliable way to improve your outcome without taking on more risk.
The Durham renewal checklist
Before you choose a term, we work through five questions with clients:
- What is the balance, the amortization and the payment at renewal? Use the mortgage calculator on our site to see how a one-point change moves the monthly payment.
- What else is happening in the next five years? A retirement in 2029, a child starting university, a planned downsize from a Bowmanville two-storey to a bungalow in Newcastle — each one changes how much flexibility you need.
- Is there other debt that costs more than the mortgage? Rolling a line of credit or credit-card balance into the mortgage at renewal is a refinance, which does require qualifying, but it can simplify cash flow. It is worth modelling against the alternative of attacking that debt directly.
- Does the mortgage have a role in your investment plan? For some households with a readvanceable mortgage and a long horizon, a strategy such as the Smith Manoeuvre may be worth exploring, subject to suitability. That is a planning conversation, not a renewal-letter decision.
- Is your protection in place? A renewal is a natural moment to confirm that life and disability coverage would still carry the mortgage if something happened to one income.
How this connects to the rest of your plan
The mortgage is usually the largest fixed cost in a Durham household budget. The term you choose determines how much is left over for RRSP and TFSA contributions, how much risk you can comfortably carry in your investments, and when retirement becomes realistic. Choosing the rate in isolation, and the investment plan in another office, is how the pieces end up pulling against each other. We prefer to have the mortgage agent and the planner at the same table.
Frequently asked questions
Does the Bank of Canada raising rates mean my fixed renewal will be higher?
Not necessarily. Fixed rates track bond yields, which move on expectations. The variable side responds directly to the policy rate. Ask for both quotes on the same day and compare the spread.
Can I switch lenders at renewal without passing the stress test?
For an uninsured mortgage, a straight switch at renewal with no change to the amount or amortization is not subject to OSFI’s minimum qualifying rate. A refinance that adds money or extends the amortization does require qualifying.
How early should I start?
Most lenders will hold a rate for 90 to 120 days, subject to approval. Starting four months out gives you time to compare, gather documents and avoid signing under time pressure.
Is a mortgage agent paid by me or the lender?
For standard residential mortgages, the lender typically pays the agent’s compensation. Ask any agent to confirm how they are paid in writing.
Next step
If your renewal falls in 2026 or 2027, a mortgage review with our team takes about 30 minutes. We will look at the renewal offer alongside your broader plan and show you the trade-offs in plain numbers. There is no obligation, and it is confidential. Book online or call 1-800-723-2138.
Chad Harmer, PFP®, CIM®, FCSI®, MBA, is a Financial Planner and the founder of Harmer Wealth Management in Orono, Ontario, serving Bowmanville, Port Hope, Newcastle and the wider Durham and Northumberland communities. Mortgages offered through MortgageBroker.ca; Chad Harmer, Mortgage Agent Lic. M19000975. This article is general information, not personalized advice. Mortgage approval and rate holds are subject to lender criteria.