Shift to Shorter, Variable Mortgages Raises Canadian Household Rate Risk, National Bank Says
MT newswire2026/10/07 14:4810:48 AM EDT, 10/07/2026 (MT Newswires) -- Canadian households are increasingly opting for shorter-term and variable-rate mortgages, leaving them more exposed to interest-rate changes as markets price in tighter monetary policy, according to National Bank of Canada in a Wednesday note. The share of new mortgages with fixed terms of five years or more fell to 8.8% in July, the lowest since records began in 2013, leaving 91.2% with shorter-term fixed or variable rates, wrote National Bank. The trend has been building for years, with the share of mortgages carrying fixed terms of five years or more dropping below 20% in 2022. Shorter fixed terms dominated in 2023 and 2024, while variable-rate mortgages have gained traction since 2025 as shorter-term borrowing became relatively cheaper, said the bank. The shift in mortgage preferences could make household payments more sensitive to Bank of Canada rate changes. As such, a more aggressive tightening cycle would raise borrowing costs for more borrowers and put further pressure on housing activity, particularly amid subdued market conditions and a weaker demographic outlook, added National Bank.
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