Last updated: September 2026
Canadians have effectively stopped signing five-year mortgages. Mortgage broker Jeff Mudrick, who has been arranging mortgages in the GTA for years, says five-year fixed terms are now roughly one percent of the deals his brokerage writes. Almost everyone is choosing two or three year terms instead, and most of them are choosing that length for a reason that has nothing to do with mortgages.
Jeff has been on my podcast four times now. This was the conversation where something he said genuinely stopped me, and it was not about rates.
Why Has Everyone Stopped Taking Five-Year Terms?
Because they are not buying a mortgage term. They are buying a date.
Jeff walked me through the pattern, and once you see it you cannot unsee it. Three years ago clients wanted five-year terms. Two years ago it was four. Last year it was three. This year it is two.
“The main conversation we have with clients is, I just want payment security until Trump’s not a president anymore. So like, let’s look at a two year fixed. And then we’ll reevaluate after that.” Jeff Mudrick, mortgage broker
Every year, people pick the term that ends when they think the uncertainty ends. And every year the uncertainty does not end, so the term gets shorter.
Here is the part worth sitting with. Government spending goes up regardless of who is in power, and government spending is what drives bond yields, and bond yields are what set fixed mortgage rates. Picking a term that expires on an election date is anchoring the biggest debt of your life to something that does not actually control the thing you are worried about.
Worth knowing: before COVID, there was a thirty year stretch where taking a five-year variable rate would have beaten the five-year fixed every single time. Canadians still mostly chose fixed, because people buy payment certainty, not math.
What Does a Shorter Term Actually Set Up?
Jeff’s concern, and it is his observation rather than a published forecast, is that a lot of mortgages written today are going to come due in the same narrow window a few years out.
The renewal wave everyone has been writing about is happening right now. According to the Bank of Canada (July 2025), roughly sixty percent of outstanding Canadian mortgages renew in 2025 or 2026, and those coming off five-year fixed terms signed during the low-rate years face average payment increases of fifteen to twenty percent.
What Jeff is pointing at is the next one. If a large share of borrowers are now signing two and three year terms in 2026, those terms expire together. Nobody has published a number for that yet, and I want to be straight that this is a working broker reading his own book, not a statistic. But he is the one writing the deals, and he is seeing it before it shows up in anybody’s data.
The Thing Almost Nobody Has Priced In
This is the part I did not know, and it has nothing to do with your mortgage.
Your Ontario property taxes are still calculated using what your home was worth on January 1, 2016.
MPAC, the agency that assesses property values in Ontario, is supposed to reassess every four years. The 2020 reassessment was postponed because of COVID. In August 2023 the province filed a regulation extending that postponement. Property assessments for the 2026 tax year are still based on fully phased in January 1, 2016 values, and as of now there is no announced date for when a reassessment resumes.
“When we get those reports on purchases or refinances, it shows property value estimated three hundred and thirty thousand. And then on the application, we’re like, property value is at nine hundred or a million. So something’s going to change.” Jeff Mudrick, mortgage broker
That gap is not going to close gently. Whenever the province does resume, the correction covers a decade of price movement in one step, and nobody gets to phase in a decade of their own budget to match it.
You will see confident predictions that reassessment lands in a specific year. There is no announced date. What is documented is that values are frozen at 2016, two cycles have been skipped, and the gap keeps widening every year it is delayed. Plan for the direction, not for a date.
How Does the Stress Test Push You Toward a Variable Rate?
This is a mechanic almost no buyer understands, and it quietly decides how much house you can buy.
When a lender qualifies you, they do not use the rate you are actually going to pay. They use your contract rate plus two percent, or 5.25 percent, whichever is higher. So the lower your contract rate, the lower the rate you are tested at, and the more you qualify for.
That is a legitimate strategy. It is also a strategy where the thing making your purchase possible is the same thing carrying the risk. Know which one you are doing.
Why Does the Bank With the Best Rate Keep Changing?
This was the most useful thing in the episode and I have never heard anyone say it publicly.
The big banks take turns offering the best rate, and the turns line up with their fiscal year ends.
“Scotia, their year end is November 1st. And they had a special mid to end of August that said we’re offering the absolute lowest rate. And it was, like 30 basis points lower than any other competitor. But it has to close in 60 days. And hence that 60 days is just before their year end.” Jeff Mudrick, mortgage broker
RBC does it at a different point. TD did it at the beginning of the year. The rate is not random and it is not a reward for loyalty. It is a bank trying to book volume before it closes its books.
What to do with that: if your renewal is flexible by a few weeks, ask your broker which lender is currently in its push. A broker who works with all of them can see the rotation. Your own bank can only ever offer you its own position in it.
What a Lender Says You Can Afford vs What You Can Actually Live On
Every lender qualifies you on your gross income. Before tax. Before union dues. Before your pension contribution.
Jeff’s brokerage runs a second number alongside it, based on what actually lands in your account.
“Maybe you make five thousand dollars a paycheck. But you’re walking away with three thousand. And the lender will say you can use up to three thousand a month on your mortgage payment. Well, that doesn’t make sense.” Jeff Mudrick, mortgage broker
His words for why he does it: so he does not get a call six months later from a client eating ramen every night. The maximum a bank will lend you is not a recommendation. It is a ceiling, and it is calculated on money you never actually see.
Are Today’s Rates Actually High?
No, and this is where I get frustrated with the conversation.
The twenty year average for a five-year fixed rate in Canada sits around 4.18 percent. We are roughly at that number right now, and below it on the best available insured rates.
The reason it feels brutal is not the rate. It is the ratio between the rate and the size of the debt. I explained this on the buyer side recently and it applies just as hard here.
| Scenario | Mortgage | Rate | Roughly what it costs monthly |
|---|---|---|---|
| Your parents’ era | $200,000 | 12% | About $2,100 |
| Today | $400,000 | 4% | About $2,100 |
Illustrative, 25 year amortization, semi-annual compounding. The point is the shape, not the precision.
Same payment. Twice the debt. So when someone tells you they survived eighteen percent, ask what the price was. The rate on its own tells you nothing. What matters is the rate measured against what you have to borrow, and that is why higher rates push prices down: the monthly payment people can carry does not really move.
Frequently Asked Questions
Should I take a two year or a five year mortgage term right now?
There is no universal answer, but be honest about why you are choosing. If you are picking a short term because you believe conditions improve by a specific date, you are making a prediction, not a plan. If you are picking it because you expect your own situation to change, that is a reason. Jeff’s framing is that flexibility is the thing worth optimising for, because your life will change more over the term than the economy will.
Why is my Ontario property assessment so much lower than my home is worth?
Because it reflects what your property was worth on January 1, 2016. Ontario postponed the 2020 reassessment during COVID and extended that postponement in 2023. Assessments for the 2026 tax year are still based on 2016 values, and no resumption date has been announced.
Does a variable rate really let me qualify for more house?
Usually yes. Lenders qualify you at your contract rate plus two percent, or 5.25 percent, whichever is higher. Because variable rates currently sit well below fixed, the variable path is tested at a lower rate and produces a higher maximum purchase price for the same income.
Can I switch from a variable rate to a fixed rate later?
Generally yes, and usually at no cost, to whatever the lender’s fixed rate is at that moment. Lenders allow it because they typically earn more on fixed. Confirm the conversion terms with your own lender before you rely on it, since the rate you convert to is the rate available then, not the one available today.
Why does the bank offering the best mortgage rate keep changing?
Rate specials tend to cluster around each lender’s fiscal year end, with closing deadlines that fall just before it. A broker working across many lenders can see who is currently pushing for volume. A single bank can only quote you its own position.
Watch the Full Episode
Related Reading
- How to identify if it’s a buyer’s or seller’s market
- Canada’s economic picture and Toronto real estate
- Navigating the 4 Ws of home buying
- Should I buy or sell first?
If you are renewing in the next year, or trying to work out what you can actually carry rather than what a bank will approve, I am happy to point you toward people who do this properly. No pitch. Call or text me at 647-328-8958.