Best Variable Rate Mortgages in Canada: Prime, Discounts and How to Compare

A variable-rate mortgage is priced from the lender’s prime rate, so the number to compare between lenders is the rate relative to prime, alongside how the payment behaves when prime moves. This page shows the current prime rate, what chartered banks charged on the variable mortgages they funded, how the two payment types work, and what to compare. “Best” here means the lowest rate relative to prime on a mortgage whose payment type, conversion and prepayment terms fit you. It’s part of the mortgage rates hub; for general shopping steps see how to get the best mortgage rate, and for the fixed alternative see 5-year fixed rates.

How variable rates are priced

RBC describes a variable rate mortgage as one “where the interest rate can change over time, based on market conditions and your lender’s prime rate.” The Financial Consumer Agency of Canada (FCAC) says: “The prime interest rate is the rate lenders use to set their posted interest rate” and “Your lender may offer you an interest rate of prime plus a percent. This is often the case with a variable rate mortgage.” A rate can also be quoted as prime minus a discount. Either way, when prime changes your rate changes by the same amount and the spread to prime stays as agreed.

Each bank announces its own prime rate; RBC, for example, describes its prime as a rate “announced by Royal Bank of Canada from time to time as its prime rate.” The Bank of Canada publishes a chartered-bank prime rate (series V80691311): 4.45% as of September 30, 2026. The Bank of Canada’s own policy rate, its target for the overnight rate, was 2.25% as of October 1, 2026. How the two relate is covered in the prime rate explained.

What borrowers paid on variable mortgages

Variable-rate mortgages that chartered banks funded in July 2026 carried an average of 3.75% if insured and 3.86% if not (Bank of Canada series V122667776 and V122667782). The Bank’s “funds advanced” figures count renewals and refinancing as well as new loans. The 5-year fixed page explains how to read these monthly averages and gives the fixed-rate figures for the same month; insured vs uninsured mortgages explains which loans carry mortgage loan insurance.

What a change in prime does to the payment

The discount below is hypothetical, not an offer; the prime rate is the current one. RBC states that interest on its variable rates “is compounded monthly, not in advance”, and the example uses monthly compounding; your contract states how your lender compounds.

Whether your payment actually changes depends on the payment type.

Fixed payments or adjustable payments

FCAC’s guide to choosing a mortgage describes both: with a variable rate “you may keep your payments the same for the duration of your term. Lenders call this a fixed payment with a variable interest rate”, or “You may also opt for an adjustable payment with a variable rate.” Its guide to mortgage interest, the source of the quotes below, compares how the two work:

The same guide warns that a variable rate with fixed payments “may be riskier than you expect”: “You could end up in a situation where none of your payment goes toward paying down the principal. Instead of paying down your mortgage, the total amount you owe on your mortgage will increase.” “The trigger point is listed in your mortgage contract.” The trigger rate explained shows how to work out yours, and adjustable-rate mortgages covers the adjustable type.

Which type you get depends on the lender’s product, so ask. RBC, for example, states: “At RBC, your variable rate mortgage payment amount stays fixed for the term.”

Rate caps and converting to fixed

FCAC suggests asking your lender whether it offers:

• “an interest rate cap : a maximum interest rate your lender can charge on a mortgage”
• “a convertibility feature : where, at any time during your term, you can convert or change your mortgage to a fixed interest rate”

If your variable-rate mortgage has a convertibility feature, you can change it to a fixed rate during the term, but you usually pay a fee, other conditions may apply, and the new fixed rate may be higher than the variable rate you've been paying. At some lenders a converted mortgage stays fixed for the rest of the term; RBC, for example, says you can't return to a variable rate during that term. Convertible mortgages covers this in more detail.

Breaking a variable mortgage

On a closed variable-rate mortgage the penalty is typically 3 months' interest. Your mortgage contract sets exactly how your lender calculates the penalty. On a fixed rate the penalty can instead be the interest rate differential, which is why the penalty is part of the fixed-or-variable trade-off; how mortgage penalties are calculated has each big bank’s method. One feature fixed rates can have that variables can’t: FCAC says the assumable option “is typically available on most fixed-rate mortgages. It’s not available with variable-rate mortgages and home equity lines of credit.”

How to compare variable rate offers

Questions to ask when shopping for a mortgage has a longer list.

Fixed or variable

FCAC says a variable-rate mortgage may suit you “if you’re comfortable with: your interest rate changing your mortgage payments potentially changing the need to follow interest rates closely if your mortgage has a convertibility option”, and that “Typically, a variable interest rate is lower than a fixed interest rate for a similar term.” The full comparison is in fixed vs variable mortgages and is a variable rate mortgage worth the risk. Where rates may head is covered in interest rate forecasts.