12 February 2026

Introduction

In 2025, mortgage rates are experiencing fluctuations that make choosing between a fixed rate and a variable rate more challenging. While fixed rates offer safety and stability, variable rates stand out for their flexibility and often lower interest rates, though with greater uncertainty. To choose the best option, it’s essential to understand how each rate type works, analyze economic forecasts, and assess your own risk tolerance. In a context of high inflation, thinking through your mortgage becomes an even more strategic decision.

In this article, discover a complete guide to making an informed decision based on your profile and current market conditions.

Understanding the Different Types of Mortgage Rates

Comparison Between Fixed Rate and Variable Rate

Some institutions, such as Desjardins, offer clients different prime rate options, which directly influence the choice between fixed and variable rates.

Fixed Rate: Key Benefits and Characteristics

• Fixed monthly payments that are easy to budget.
• No surprises if interest rates rise during the term.
• Ideal for families or borrowers who want to lock in their mortgage rate during economic uncertainty.

Variable Rate: Key Benefits and Characteristics

• Initial rate often lower than the fixed rate.
• Potential to benefit from decreases in the Bank of Canada’s policy rate.
• A better option for borrowers with higher risk tolerance or shorter borrowing horizons.

Interest Rate Trends and the Policy Rate in 2025

Interest Rate Forecasts for 2025

Economists expect the Bank of Canada could continue to adjust its policy rate to support the economy, with gradual cuts expected throughout the year. These moves directly influence variable rates, which respond more quickly to market fluctuations.

• Possible policy-rate cut of 0.5% to 1% in 2025, according to several forecasts.
• Stabilization of fixed rates, which rose sharply but appear to be leveling off early this year.

The central bank’s policy plays a key role in where rates will head in 2025. That’s why it’s essential to follow its decisions closely.

Fixed Rates in 2025: Stability or Another Rise?

A fixed rate offers peace of mind, and in 2025 it remains a reassuring option for those who want to secure their budget for several years.

• Today’s fixed rates are competitive compared to previous years.
• Less volatility than variable rates, which appeals to cautious borrowers.
• However, fixed rates are still higher than variable rates at the time the mortgage is signed.

Expert tip from Yannick Arsenault: if you prioritize stable payments and want to avoid surprises, a fixed rate is an option worth considering seriously in 2025.

Variable Rates in 2025: Opportunity or Risk?

Variable rates are drawing a lot of attention this year. With expected policy-rate cuts, they could offer meaningful savings.

• Currently low variable rates, with potential for further decreases.
• Potential short- and mid-term savings if the policy rate continues to decline.
• Be mindful of market volatility: if economic forecasts shift suddenly, variable rates could rise again.

A variable rate can be a strong fit for buyers willing to closely track rate trends and adjust their strategy along the way. It can also be a flexible option for those who plan to pay down their mortgage faster.

The Gatineau real estate market reflects this same dynamic: borrowers are adapting financing decisions based on both local and national outlooks.

Pros and Cons by Interest Rate Type

Before deciding on your mortgage, it’s important to carefully weigh the pros and cons of each option. Whether you choose a fixed or variable rate, each comes with benefits and risks to consider based on your situation and the 2025 economic environment.

Benefits of Fixed Rates

• Payment stability: The main advantage of a fixed rate is predictability: your payments remain the same from start to finish.
• Protection against rising interest rates: You’re shielded from rate increases, helping secure your budget for years.
• Ideal for long-term plans: If you plan to keep your property for several years, a fixed rate offers peace of mind.

Drawbacks of Fixed Rates

• Higher initial cost: Fixed rates usually start higher than variable rates, which can be a bigger upfront financial effort.
• Less flexibility if rates drop: If interest rates decline, you won’t benefit from lower costs, unlike with a variable rate.

Benefits of Variable Rates

• Often lower starting rate: In 2025, variable rates often begin more attractively than fixed rates.
• Potential savings if the policy rate falls: With current forecasts pointing to policy-rate cuts, variable rates could be especially appealing.
• Repayment flexibility: Variable-rate mortgages sometimes offer more flexible prepayment conditions.

Drawbacks of Variable Rates

• Risk of rising mortgage rates: If the policy rate increases, your payments can rise and impact your budget.
• Less financial stability: Rate fluctuations can make managing your mortgage more uncertain, especially long term.
• Requires ongoing attention: Choosing a variable rate means regularly monitoring interest rates to anticipate adjustments.

There is no one-size-fits-all solution: choosing between fixed and variable depends on your borrower profile, your risk tolerance, and your financial goals. As a real estate broker in Gatineau, I can help you analyze these factors and choose the option that maximizes your benefits while securing your real estate project.

How to Choose Between Fixed and Variable Rates

If you’re primarily looking for stability, want to know exactly what your monthly payments will be for the coming years, and want to avoid surprises, a fixed rate is for you. It provides peace of mind and is ideal for a long-term purchase or for families who want to protect their budget.

On the other hand, if you’re comfortable with some uncertainty and want to take advantage of potential rate declines in 2025, a variable rate can be attractive. However, it requires paying attention to mortgage rate trends so you can react at the right time.

The key is to align your choice with your personal situation and your financial objectives. And of course, to get support so you can make a well-informed decision based on today’s market.

Case Studies: Choosing the Right Prime Rate Strategy for Your Mortgage

Profile 1: First-Time Buyer With a Tight Budget

You’re buying your first home and your budget is very tight. Any payment increase can affect your financial balance.

Recommended choice: fixed rate.

Stable payments protect you from rising interest rates and allow you to plan expenses with no surprises.

Profile 2: Real Estate Investor

You’re financing an income property or a rental condo and you closely follow market changes.

Recommended choice: variable rate.

In 2025, with the possibility of policy-rate cuts, a variable rate can improve short-term profitability. You also keep flexibility if you plan to refinance or sell quickly.

Profile 3: Family Seeking Peace of Mind

You’re buying your primary residence with a long-term plan to live there for several years.

Recommended choice: fixed rate.

With predictable payments, a fixed rate provides peace of mind to manage your family budget confidently, regardless of interest rate movements.

Every situation is unique, and these case studies provide a concrete look at possible strategies. For a personalized analysis of your project and advice tailored to the Gatineau and Outaouais market, I’m available to help you choose the right mortgage rate.

FAQ

Fixed rate or variable rate: which is more advantageous in 2025?

In 2025, a variable rate may be more advantageous if the policy rate continues to decline. However, a fixed rate is still preferable for those who want stable monthly payments, as it protects against a potential rise in interest rates over the next few years.

Why can variable rates be risky?

Variable rates are risky because they depend directly on changes in the Bank of Canada’s policy rate. If interest rates rise suddenly, your mortgage payments can increase quickly, which impacts your budget.

How are mortgage rates set in Canada?

Mortgage rates in Canada are set based on the Bank of Canada’s policy rate and financial market conditions. Financial institutions adjust their fixed and variable rates according to borrowing costs in the markets and the borrower’s risk profile.

Can you switch from a variable rate to a fixed rate during your mortgage?

Yes, you can switch from a variable rate to a fixed rate during the mortgage term. This option, often called a conversion, helps lock in your rate if the market becomes less favorable, but conditions vary by lender.

Conclusion: Choosing the Right Mortgage Rate in 2025

In 2025, choosing between a fixed rate and a variable rate primarily depends on your risk tolerance, your financial goals, and the market outlook. A fixed rate feels reassuring thanks to its stability, while a variable rate can be attractive for its potential savings if interest rates keep declining. To make the right decision, it’s essential to assess your situation carefully and surround yourself with the right advice.

As a real estate broker in Gatineau, I can help you evaluate the best financing strategy for your project. Contact me to get a personalized opinion and make the best decision for your mortgage.