Five-year-plus fixed mortgages made up just 8.8% of new originations in July 2026, the lowes share since record began in 2013.
If You Read Nothing Else
- Fixed terms of five years or longer made up just 8.8% of new mortgages in July 2026, the lowest share since records began in 2013.
- These longer terms have made up less than 20% of new mortgages every year since 2022.
- Borrowers favoured shorter fixed terms in 2023 and 2024, then moved toward variable rates in 2025 and 2026.
- With more borrowers on variable rates and shorter terms, a Bank of Canada rate hike would reach more households sooner.
- A 5-year fixed offers payment certainty, while shorter terms and variable rates carry more exposure to rate changes.
The 5-year fixed mortgage has been the default choice for Canadian homebuyers looking for a place to settle. Now, new data from National Bank shows this option has fallen to a record low share of new mortgage originations, just 8.8% in July 2026, the lowest since the series began in 2013.
Why is this happening, and what are Canadian borrowers choosing instead now? And what could it mean for borrowers if the bank of Canada raises rates? This article will explore and explain the factors influencing this trend amongst Canadians.
The Data
National Bank released an analysis on October 8th, 2026. This showed 5-year-plus mortgage fixed terms at 8.8% of originations in July in the Canadian economy. These terms have made up less than 20% of new mortgages since 2022, and July was a record low for the series.
Canadian borrowers instead favoured shorter fixed-term mortgages, which dominated in the previous years of 2023 and 2024. Variable-rate mortgages then attracted more interest from homebuyers in 2025 and 2026, after the Bank of Canada cut rates through 2024 and 2025.
8.80%
of new mortgages in July 2026 had fixed terms of five years or longer, the lowest share since 2013
Why the Shift Happened
Borrowers who were expecting further rate cuts from the Bank of Canada were the same ones who favoured shorter terms or variable rates to benefit them sooner. Locking in on a fixed mortgage for five years felt expensive at the time, when many were predicting rates could fall soon due to the Bank’s cuts.
The Risk Now
National Bank senior economist Daren King warned that if the rate increases investors expect do happen, higher borrowing costs could further slow a housing market that is already showing only modest activity. The shift in Canadians’ mortgage choices also means Bank of Canada rate changes could reach borrowers more quickly. Borrowers with variable rates tied to prime could see their costs change sooner, and those on shorter terms will come up for renewal sooner. If the Bank raises rates on October 28th, a larger share of borrowers could feel its weight sooner.
Context
Unclear about the benefits of a 5-year fixed loan versus what a shorter-term or variable rate might offer?
A 5-year fixed mortgage offers several benefits for borrowers, like payment certainty, and protection from rate increases when the Bank announces a hike.
On the other hand, shorter-term and variable-rate mortgages can offer benefits like a lower initial rate on the loan itself. But as mentioned before, this leaves borrowers with more exposure to the effects of rate movement.
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