Fixed or variable after a rate hike
The choice is a payment you can name today against a payment that moves when prime moves. After October 28, 2026 the overnight rate is 2.50%. Prime on the RBC sheet that morning was still 4.45%. Variable quotes written in the first week of October were written against that older prime.
Two real reports, one balance
These rows are from the public mega thread, not a lender's advertisement. Payments use $500,000 amortized over 25 years.
| Report | Rate | Monthly payment |
|---|---|---|
| 5-year variable, TD renewal letter, October 9 | 3.55% | $2,509.57 |
| Same variable if prime rises a full 25 points | 3.80% | $2,576.17 |
| 3-year fixed someone said they had just got, October 8 | 4.43% | $2,747.94 |
| 3-year fixed on that same TD letter, October 9 | 4.54% | $2,778.49 |
At the pre-hike variable, the payment is $238.37 a month under the 4.43% fixed. After a full pass-through to 3.80%, it is still $171.77 a month under that fixed. A second 25 point hike, if it happened and was passed through, would put the variable near 4.05%. You can drop 4.05 into the calculator on the homepage and read the new gap. The Bank said a further increase might be needed. It did not schedule one.
The parts a rate card skips
| Term in the contract | Fixed | Variable |
|---|---|---|
| Payment | Set for the term | Moves with prime, or the amortization does, if the payment is fixed |
| Break fee before maturity | Often an interest-rate differential. Can be large when rates have fallen | Typically three months' interest. Confirm the clause |
| Convert to the other type | You are already fixed | Many contracts let you lock a fixed rate later. The fixed rate on that day is whatever the lender offers then |
| Discount | Baked into the rate you sign | Prime minus a number. The number usually stays. Prime moves |
A way to decide without a forecast
Pick the fixed term you would actually finish. A two-year fixed and a five-year fixed answer different plans. See two-year or five-year. Then ask one question: if prime is 50 points higher in a year, is the variable payment still one you will pay without changing the household plan? If the answer is no, the fixed rate is buying that ceiling. If the answer is yes, the variable's lower starting payment is the thing you are being paid to take the risk.
Insured files in the thread were cheaper than several uninsured renewal letters. Do not average them into one "market rate." Price your own status. Request cheaper rates asks a broker for both products on that status.