Fixed-rate mortgage

Fixed rates are priced off Government of Canada bond yields, not the Bank of Canada's overnight rate — so they can move before the central bank does. When bond yields fall, fixed rates tend to follow within weeks.

The appeal is certainty: your payment and rate are locked, which makes budgeting easy and shields you from rate hikes during the term. The trade-off is the penalty to break a fixed early, calculated as the greater of three months' interest or the interest rate differential (IRD), which can be steep.

A shorter fixed term (2–3 years) is a common compromise when you expect rates to fall — you lock in now but aren't trapped for five years if pricing improves.