By Leanne Mollica
Mortgage Broker | Mortgage Architects – Team Borle
Founder, My Mortgage Strategy
Serving Salmon Arm, the Shuswap, and British Columbia
If you follow mortgage news, you’ve probably noticed more headlines suggesting that variable rates are making a comeback. That shift has led many borrowers to revisit the fixed vs. variable conversation — especially at a time when interest rates appear more stable than they were over the past couple of years.
Rather than framing this as a question of “which option is better,” it’s more helpful to understand how each option works, what risks and trade-offs exist, and how those factors align with your personal financial situation.
When the difference between fixed and variable is narrow
In many cases, the difference between fixed and variable rates can be relatively small — sometimes measured in fractions of a percent. When the spread is tight, the decision is less about chasing the lowest possible rate and more about certainty, flexibility, and tolerance for change.
A slightly higher rate isn’t automatically “worse,” just as a slightly lower rate isn’t automatically “better.” Context matters.
When a fixed-rate mortgage may be a good fit
A fixed-rate mortgage offers consistency. Your interest rate and payment amount stay the same for the length of your term.
A fixed option may suit borrowers who:
- Prefer predictable monthly payments
- Don’t want to monitor interest rate changes
- Expect to keep the mortgage for the full term
- Would be impacted by rising payments
- Want stability if lending or qualification rules tighten
For some households, that peace of mind has real value — especially when budgeting or planning longer-term.
When a variable-rate mortgage may suit some borrowers
Variable-rate mortgages move with changes to the lender’s prime rate. Payments or amortization can fluctuate depending on the product structure.
Variable options may appeal to borrowers who:
- Have strong, stable cash flow
- Are comfortable with payment or balance changes
- Value flexibility, including typically lower penalties to break
- Are thinking shorter-term or may not keep the mortgage for the full term
Variable mortgages aren’t inherently risky — but they do require a higher level of comfort with uncertainty.
A common misunderstanding: “locking in later”
One feature many borrowers ask about is the ability to start with a variable rate and switch to fixed later. Many variable mortgages are convertible, meaning the lender may allow you to convert to a fixed rate during the term.
However, this is often misunderstood.
When you convert:
- You are not locking into your original contract rate
- You are converting into whatever fixed rates the lender is offering at that time
- The new fixed term is typically required to be equal to or longer than the remaining term
Example:
If you start with a 5-year variable and decide to convert after 2 years, the lender may require you to take a minimum 3-year fixed term at the then-current fixed rate, not the rate that was available when your mortgage started.
This option can be useful — but it’s important to understand how it actually works before relying on it as a strategy.
The risk of focusing only on today’s rate
One of the biggest mistakes borrowers can make is choosing a mortgage option based solely on a small upfront rate difference, without considering how changes could affect them down the road.
Mortgage decisions aren’t just about rates — they’re about:
- Cash flow
- Flexibility
- Risk tolerance
- Time horizon
- Life changes that may occur during the term
The takeaway
There is no universally “right” choice between fixed and variable. Each option can make sense depending on the borrower and the circumstances.
That’s why mortgage decisions should be approached as personal finance decisions, not predictions about where rates might go next.
If you’d like to talk through how these options apply to your specific situation — without pressure or assumptions — I’m always happy to help.