We’ve been watching something unfold in the mortgage market that you need to know about.
Since March, fixed mortgage rates have been climbing. Not slowly. Not quietly. They’ve jumped as much as 40 basis points in some cases.
The reason? Global uncertainty. Geopolitical tensions, especially around the Iran conflict, have rattled bond markets and stoked inflation fears. When bond yields rise, fixed mortgage rates follow.
Right now, the lowest five-year insured mortgage rate in Canada sits at 4.04%. Uninsured rates are slightly higher at 4.19%. Variable rates are lower at 3.35%, but market surveys suggest they’ll likely rise by early 2027.
So here’s the question we’re hearing more often: Should you lock in for five years, or go with a shorter term like three years?
Let’s break it down.
Why Fixed Rates Are Moving (And What It Means for You)
Mortgage rates don’t exist in a vacuum. They respond to global events, central bank signals, and how investors behave.
When geopolitical tensions rise, investors get nervous. They move money into safer assets like government bonds. The demand pushes bond yields up. And since fixed mortgage rates are tied to bond yields, lenders raise their rates.
This isn’t speculation. It’s happening right now.
Canadian lenders have already increased fixed rates by up to 40 basis points since March. That’s a noticeable shift if you’re shopping for a mortgage or coming up for renewal.
Here’s where things stand:
- Five-year insured rate: 4.04%
- Five-year uninsured rate: 4.19%
- Variable rate: 3.35%
The gap between insured and uninsured rates reflects lender risk. If you put down less than 20%, you need mortgage insurance. The protection allows lenders to offer a slightly lower rate.
But the real tension right now is between fixed and variable.
Fixed vs. Variable: The Calculation You’re Probably Running
Variable rates are cheaper today. That’s clear.
But the Q1 Market Participants Survey suggests variable rates will rise by early 2027. If you choose variable now, you’re betting rates stay low long enough for you to save money.
That’s a gamble some borrowers are willing to take. Others want certainty.
Fixed rates give you predictability. You know your payment. You know your budget. You don’t have to check the news every time the Bank of Canada meets.
But here’s the thing.
You don’t have to lock in for five years.
A three-year term might give you both stability and flexibility.
The Case for a Three-Year Fixed Term
Most borrowers default to a five-year term. It’s the industry standard. It feels safe.
But safe doesn’t mean smart.
A three-year term gives you flexibility. You lock in a rate, protect yourself from short-term swings, and position yourself to renegotiate sooner.
Here’s what this means for you:
If rates drop in two or three years, you’re not stuck in a five-year contract. You renegotiate when your term ends and take advantage of better rates.
If rates rise, you’re protected for the next three years. You have time to plan your next move.
Yes, a three-year rate might be slightly higher than a five-year rate right now. But the difference is often small. And the flexibility can be worth it.
One way to look at it:
A five-year term is like signing a long-term lease. You’re committed. A three-year term is like a shorter lease with an option to renew or move. More control.
What We’re Seeing in the Market Right Now
We work with borrowers across Newfoundland and Atlantic Canada every day. We’re seeing three common scenarios:
1. First-time buyers who want certainty
You’re stretching to afford your first home. You need to know your payment won’t change. A three-year fixed term gives you that stability without locking you in for too long.
2. Renewals who are nervous about timing
Your term is ending soon. You’re looking at rates that are higher than what you had. You’re wondering if you should wait or lock in now.
Here’s the truth: Waiting rarely works out. If rates are rising, they’ll keep rising. A three-year term lets you lock in now and reassess when things stabilize.
3. Investors who want flexibility
You’re managing multiple properties. You need to balance cash flow with strategy. A three-year term gives you the ability to refinance or restructure sooner if your portfolio changes.
All three scenarios share something: the value of flexibility.
The Hidden Risk of Waiting
Some borrowers think they can time the market. They’ll wait for rates to drop, then lock in.
That strategy assumes rates will drop. And that you’ll know when the bottom hits.
We’ve been doing this for over 18 years. We’ve never met anyone who perfectly timed the market.
Here’s what happens:
Rates rise while you wait. You end up paying more than you would have if you’d locked in earlier.
Or rates drop slightly, but by the time you act, they’ve already started climbing again.
The market doesn’t wait for you to be ready.
A three-year term removes the pressure. You lock in now. You protect yourself from short-term swings. And you give yourself a chance to renegotiate when your term ends.
What About Variable Rates?
Variable rates are lower right now. That’s a fact.
But the Q1 Market Participants Survey suggests they’ll rise by early 2027. That’s less than two years from now.
If you choose variable, you’re betting the savings you get today will outweigh the increases coming tomorrow.
For some borrowers, that bet makes sense. If you can handle payment increases, or if you plan to pay down your mortgage aggressively, variable might work.
But if you need predictability, or if your budget is tight, variable adds risk.
A three-year fixed term removes the risk. You know your rate. You know your payment. And you’re not locked in for five years.
How to Decide What’s Right for You
Every borrower is different. Your income, your goals, your risk tolerance all matter.
Here are three questions we ask every client:
1. How long do you plan to stay in this home?
If you’re planning to move in two or three years, a shorter term makes sense. You won’t pay a penalty to break your mortgage early.
2. How stable is your income?
If your income is predictable, you can handle a fixed payment. If it fluctuates, you might want the flexibility of variable.
3. How much risk are you comfortable with?
If rising rates will stress your budget, lock in now. If you can absorb increases, variable might save you money.
These aren’t trick questions. They’re the foundation of a mortgage strategy designed for your life.
What We’re Recommending Right Now
We don’t push products. We build strategies.
And right now, we’re seeing a lot of value in three-year fixed terms.
Here’s our thinking:
Rates are rising. Geopolitical uncertainty isn’t going away. Central banks are still figuring out their next moves.
A three-year term gives you protection without a long commitment. You get stability now and flexibility later.
Yes, you might pay a slightly higher rate than a five-year term. But the difference is often small. And the ability to renegotiate in three years instead of five can save you thousands.
We’ve helped over 3,400 clients across Atlantic Canada navigate mortgage decisions like this. We’ve seen what works. And we’ve seen what doesn’t.
A three-year term isn’t always the right answer. But in this market, it’s worth considering.
The Bottom Line
Fixed mortgage rates are rising. That’s not changing anytime soon.
You have options. You can lock in for five years. You can choose variable. Or you can take a middle path with a three-year term.
The right choice depends on your situation. Your income. Your goals. Your risk tolerance.
But here’s what we know: Waiting rarely works out. The market doesn’t wait for you to be ready.
If you’re coming up for renewal, or if you’re shopping for a mortgage right now, you need a strategy. Not just a rate.
We can help you build that strategy. We’ll compare rates from over 20 lenders. We’ll show you the difference between fixed and variable. And we’ll help you decide if a three-year term makes sense for your life.
You don’t need a perfect file. You need the right plan.
Let’s talk. Visit www.jenningsmortgage.com or call us at (709) 300-4518.
We’re here to help you move forward.