On the heels of two Bank of Canada rate cuts in 2025, real estate experts, buyers and sellers are watching with cautious optimism to see whether lower borrowing costs will translate into renewed housing activity — particularly in major markets like Toronto and Vancouver, where sales have hit record lows.

The market is in a moment of pause: sellers are waiting for confidence to return, buyers are weighing their options, and many are staying on the sidelines to see who moves first.

However, lower rates aren’t translating into relief the way they once did.

Instead, they’ve introduced another high-stakes decision that feels easy to get wrong. The emotional side of the mortgage process is becoming increasingly difficult to ignore, and this will matter even more in 2026.

Optimism in housing has a short half-life if buyers don’t feel supported through the process itself.

That uncertainty is most evident in how Canadians perceive risk. Real estate is one of the most regulated markets people will ever navigate, with layered approvals, dense contracts, mandatory disclosure packages, and fee schedules that vary by municipality and building type. Rather than feeling protective, that complexity often leaves buyers second-guessing themselves, especially during crucial times in the real estate lifecycle. 

Mortgage renewals will define this year for a significant share of Canadians.

Many who locked into ultra-low rates in 2021 and 2022 are now facing renewals at double or triple their original terms. For others hoping to finally enter the market, the question isn’t just “Can I afford this home?” It’s “Which choice gives me the most certainty when everything else feels unpredictable?”

This is the paradox of the moment. Prices have cooled, but confidence hasn’t recovered at the same pace. For many Canadians, that tension is being distilled into a single, deeply personal decision: a fixed or variable-rate mortgage? 

The fixed vs. variable question Canadians are quietly carrying

Fixed rates provide stability in a landscape that still feels shaky. Unemployment is 6.8 per cent, and global volatility is having a huge influence on the Canadian market. Many buyers may prioritize stability over strategy. 

In a market like this, fixed rates are becoming the emotional default for buyers because they offer predictability. With fixed rates, Canadians know their payments and can plan their budgets accordingly. People sleep a bit better at night knowing they’re protected against surprises rather than optimizing for best-case scenarios. 

Fixed rates also come with trade-offs. They’re less flexible, and breaking them can be costly. If rates continue to fall, fixed-rate borrowers may watch opportunities pass them by.

But variable rates have their own risks: many Canadians who chose variable-rate mortgages in 2021 and 2022, when rates were at historic lows, saw their payments rise quickly and unexpectedly as interest rates climbed in later years. For many Canadians, fixed-rate trade-offs feel acceptable if the alternative is financial uncertainty. 

Variable rates: a bet for the optimists

Variable rates continue to appeal to a different kind of buyer: those comfortable with volatility and confident that further rate cuts are ahead. These buyers are willing to absorb short-term uncertainty in exchange for long-term savings, and historically that approach has often paid off.

Variable rates also offer flexibility. They’re easier to exit, easier to convert and homeowners can benefit quickly if monetary policy shifts. For buyers who closely follow economic signals and can absorb payment fluctuations, that flexibility is powerful.

But variable is, at its core, a bet.

AI tools and tech platforms can help homebuyers make an informed decision. HouseSigma, for example, has made market data far more accessible, while Ownright gives buyers a better sense of the closing costs beyond the purchase price.

For those interested in variable rates, it’s never been easier to analyze recent sales and assess value and budget with greater confidence than ever before.

That transparency is meaningful, but data alone doesn’t replace judgment. AI can surface information, but it can’t account for personal risk tolerance, cash-flow pressure or how someone feels when their payments change overnight.

If variable buyers are betting on what could happen next, fixed buyers are protecting themselves from what might go wrong. Neither choice is inherently right or wrong, but both reflect how Canadians are navigating risk in a changed market.

The confidence economy of 2026

Recent Ownright survey data underscores how emotional this decision has become.

Nearly all buyers felt financially ready when they entered the process, but confidence dropped sharply once paperwork began. Mortgage terms were cited as the most stressful element of buying, and unexpected or unclear costs continued to weigh on buyers well after closing.

What’s striking is where people turn for help. Buyers trust their lawyers most, yet many still rely on online research first, revealing a gap between trusted guidance and accessible guidance.

What does it mean for fixed vs. variable decision-making? Our data shows homebuying and selling are more of a confidence calculation than a financial one. 

As we move into 2026, affordability will still matter, but may no longer be the primary barrier. What’s holding people back now is concern about value, risk and what happens if today’s purchase doesn’t behave like yesterday’s investment.

That means professionals across real estate, agents, lenders, lawyers and technology platforms will need to spend extra care helping buyers understand trade-offs, articulate risk early and connect decisions to long-term realities. Don’t just explain what a rate is, but what it means.

In a market where guarantees are gone, trust becomes the differentiator. Buyers are looking for clarity in the present, when the future seems uncertain.