Fixed or Variable? What Toronto Buyers Should Do After the Bank of Canada Rate Hike
A week after the Bank of Canada raised rates for the first time since 2023, Ralph Fox, Broker of Record at Fox Marin, sat down with mortgage broker Jason Friesen, who is managing partner at Outline Financial and a regular on the podcast. We recorded on November 4, the morning after the U.S. midterms and the day before the federal budget, to discuss the impact of the Bank of Canada’s decision, its potential effect on the Toronto real estate market and whether a fixed or variable mortgage is the best strategy.
Watch the Full Episode
If reading isn’t your thing, press play. In this episode, Ralph Fox, Broker of Record, Fox Marin, and guest Jason Frisen, managing partner at Outline Financial, share what they’ve learned from working with hundreds of Toronto buyers and sellers.
Fixed vs Variable:
“If we’re having a conversation three years from now, I think the variable rate puts you on top versus the fixed rate.” – Jason Friesen, Managing Partner, Outline Financial
His reasoning is the gab between the two rates. If the Bank of Canada hikes another 50 or even 75 basis points, which is the top end of what the big banks are forecasting, a variable rate ends up about where a fix rate is today. That is the worst-case scenario, and you break even. He also thinks rates could go the other way, because weak GDP and weakning jobs are starting to show cracks in the economy.
What That Looks Like on a $800,000 Mortgage
This example uses 3.90% variable and a 4.70% five-year fixed, both inside the range he described, on a 25-year amortization. It assumes the variable payment moves with the rate.
Five-year fixed
4.70%
$4,517
Variable today
3.90%
$4,179
Variable after another 0.50% in hikes
4.40%
$4,401
Variable after another 0.75% in hikes
4.65%
$4,515
Today, a variable starts about $340 lower a month. If the most aggressive forecast comes true, the two payments end up $2 apart. You can run your own numbers on our mortgage calculator.
When Variable Is The Wrong Call
Jason was clear that this depends on the borrower’s income and risk tolerance. If you are buying at the top of your budget, you may not have room to absorb a higher payment. the same goes if you are not confident in your income over the next few years.
A five-year fixed has its own catch. If you lock in and rates drop in year two, you will want out, and the more time left on a fixed term, the bigger the penalty to break it.
Some of Jason’s clients are electing to split the difference with two- and three-year fixed terms. Those are usually priced a little lower than the five-year, and you get to renew sooner if rates come down.
For Any Buyer Looking to Get Into The Market
If possible, put more down. In 2020, with fixed rates at 1.5%, clients put down the minimum and invested the rest. Jason now tells clients to put down as much as they can without draining their safety cushion, so the payment is still manageable if their income drops or they change jobs.
Get pre-approved. A mortgage broker can line up more than one pre-approval, at different rates and terms, from different lenders. You choose between fixed and variable once you have a property. The rate is held for 120 days. If rates go up in that window, you are protected. If they go down, you get the lower rate and the 120 days start again.
This is Jason’s view as of November 4, 2026, based on the rates available that day. It is not mortgage advice for your situation. You can reach Jason and his team at outline.ca or hello@outline.ca.
Why Ralph Thinks the Hike was a Mistake
Headline inflation came in at 3.1%, and Ralph’s point is that oil accounts for 1.1 percentage points. Extracting oil and core inflation is currently at 1.9%, right in the middle of the Bank’s 2% target, the lowest it’s been in six years. Oil is above $100 a barrel, up from about $65 before the conflict in the Middle East started in February.
“Maybe people in the audience can comment below how raising interest rates by a quarter point in Canada is going to open up the Strait of Hormuz.” – Ralph Fox, Broker of Record, Fox Marin
He also pointed to 110,000 jobs lost in the last couple of months and the flat GDP through the summer. You can track those numbers on our Economic Insights page.
Jason did not defend the hike, but he explained it. The Bank waited too long in 2022, and it doesn’t want to get caught behind again. The specific worry is diesel. Trucks and trains run on it, so the longer oil stays high, the more it works its way into food and everything else that gets shipped.
“It’s interesting to see how them making a mistake four years ago is going to cause them to make another mistake right now.” – Ralph Fox, Broker of Record, Fox Marin
Ralph asked whether the hike makes sense for any reason other than protecting the Bank’s reputation. Jason said no.
As for what comes next, Jason said the big banks do not agree and that there is no consensus amongst the big 5 Canadian banks. Some are calling for another 75 basis points of hikes and some for as little as 25. TD has another 50 pencilled in, followed by a cut before the end of next year. Even the highest of those forecasts only gets a variable rate up to where fixed is today.
What The October Numbers Say About Toronto
TRREB released its October numbers this morning. Sales were down 7.9%. New listings were down 11.9%, and active listings were down 10%. The average price was $1,024,000, down 2.7%. The full picture is on our Market Intel page.
Jason read the listing numbers as a market that is getting tighter. Fewer homes are coming up for sale, and the good ones are still drawing a lot of attention. He is seeing bidding wars again on the right house in the right neighbourhood.
Ralph responded that in low-rise, buyers never left. Bidding wars and multiple offers have stayed common on good houses in good locations throughout the downturn. Condos are a different story.
What has changed is how hard buyers are willing to extend themselves. Jason lives in the east end, where ti seems every house is listed at $999,999 whether it is worth $1 million or $1.5 million. Those homes are priced under market value to draw offers, and they still sell over asking. But in 2021, people paid hundreds of thousands over market value, which is very different from $100,000 over the list price. Today, buyers will pay a small premium for a house that deserves one and no more. Ralph said today’s buyers are “pulling their punches.”
Sellers Are Skipping The Fall
Fox Marin typically brings more than 50 properties to market in a year. This fall, Ralph noted that they were well short of where the spring suggested we would be. The conversations we normally have in June, July, and August about listing in the fall went differently this year. Many owners told us they would rather wait for spring.
Jason put that down to the same uncertainty that is keeping businesses from hiring and investing. Amid a raging trade war and economic uncertainty, consumers and businesses are pausing.
Buyers Have a Line, and They Hold It
In 2020 and 2021, Jason would get a client a pre-approval number, and the client would call back asking for another $100,000 or $200,000. That does not happen now.
“The questioin everyone always wants to know is how much am I pre-approved for. For me, the bigger question is what are we comfortable paying every month.” – Jason Friesen, Managing Partner, Outline Financial
His clients are working backward from a monthly payment they can live with. If a house goes past that number, they pass. They are also buying starter homes again and planning to move up later.
“For a long time people were skipping three rungs on the property ladder and just going into these big houses and taking on big mortgages.” – Jason Friesen, Managing Partner, Outline Financial
Ralph added the reason buyers can afford to be patient. In 2021, if you lost a house, the next sale on the street reset prices $100,000 higher, and we were telling buyers their budget would be priced out of the neighbourhood in two months. Miss a house in Roncesvalles or Leslieville today, and a similar one will come up at a similar price. The only pressure left is that good houses are scarce, and with its listings down, they are getting scarcer.
Where Prices Held and Where They Didn’t
Jason asked whether the neighbourhoods people actually want, like Roncesvalles, Leslieville and Little Italy, are holding their value better than the places buyers moved to when they got priced out.
“You look at Roncesvalles, and you see the overall market down twenty, twenty-five percent. Roncesvalles remained relatively flat.” – Ralph Fox, Broker of Record, Fox Marin
Other strong central neighbourhoods are down somewhere between 5% and 15%. Ralph expects them to recover first.
The real damage is further out. During COVID, buyers paid close to Toronto prices for more space in places that had never commanded those prices. Ralph called markets like Brampton “ground zero” for the real estate collapse.
Jason gave the example of clients who bought in Stoney Creek in 2020 and 2021 with 20% down, assuming they would work from home for good. Then the office called them back. Now they own more than the house would sell for; they cannot move, and they are foced to commute more than two hours a day with young kids.
Hamilton was sold as Toronto’s new Brooklyn in those years. Pre-construction condos there and in places like Pickering were selling for more than $1,000 a square foot.
“We didn’t tell anyone to buy there, that’s for sure.” – Ralph Fox, Broker of Record, Fox Marin
Ralph’s test for any purchase is simple. If there is another downturn, where does this property give me the most downward protection? Sometimes you pay a premium to get that. The last four years show what that insurance buys you when buying in sought-after neighbourhoods. We have written more about choosing a Toronto neighbourhood if you are weighing that now.
The Supply Gap Starting in 2027
The part of this market that gives Ralph some hope is supply. Pre-construction sales have been close to zero for three to four years. The projects sold before that will finish construction by about mid-2027. After that, outside those purpose-built rentals, nothing new is coming on the line for the next 5 – 10 years.
It will take time for this gap to be felt in the marketplace. Resale prices have to catch up to pre-construction prices before anyone will buy pre-construction again. Ralph called three to four years an optimistic estimate. Then confidence has to return, and the buildings take another three to four years to finish.
“It’s ten, twelve years before we see, in a meaningful way, new supply.” – Ralph Fox, Broker of Record, Fox Marin
Most of the homeowners we talked to this summer are electing to wait to list their properties in the spring. That is worth a second look. Active listings are down 10% and good low-rise homes are still getting multiple offers. It’s still very much anyone’s guess, but it will be really interesting to see how things line up in spring 2027.
The longer view is about supply. Almost nothing has been sold in pre-construction for three to four years, and the pipeline runs dry by mid-2027. Ralph expects the central neighbourhoods that held their value through this downturn to recover first. If you are buying, that is where your future downside is best protected.
Mortgage broker Jason Friesen said on November 4, 2026, that he would choose a variable mortgage. Variable rates were under 4% and fixed rates were in the mid-to-high 4s, so variables still break even after another 50 to 75 basis points of hikes. He would not recommend it for buyers at the top of their budget.
A pre-approval typically holds a rate for 120 days. If rates rise during that time, you keep the lower rate. If they fall, your broker can move you to the lower rate and reset the hold.
Many Toronto sellers who skipped the fall 2026 market plan to list in spring. Active listings were down 10% in October 2026, and well-priced low-rise homes are still drawing multiple offers. A home listed now faces less competition than it will when the spring listings arrive together.
Ralph Fox says Roncesvalles has stayed relatively flat while the overall market is down 20% to 25%. Other strong central neighbourhoods like Leslieville and Playter Estates, and Trinity Bellwoods are down 5% to 15%. The steepest drops are in outer markets like Brampton, Hamilton and Stoney Creek, where buyers paid close to Toronto prices for space during COVID.
On good low-rise homes in good locations, they never left. Buyers are still competing for well-priced houses in neighbourhoods like the Annex and Riverdale. Condos aren’t seeing the same competition, and the good ones typically sell in thirty days, while the rest continue to struggle.
The Fox Marin Perspective
The market will feel like this for a while, and the people who do well through a downturn are the ones who buy a home they can live in for ten years. Fox sees real wisdom in buying when the market is down, as long as you aren’t overextending yourself and understand the downsides and risks involved.
If you want a second set of eyes on a property, a neighbourhood, or to discuss your next real estate move, get in touch with the Fox Marin team. We’ve helped hundreds of Toronto buyers and sellers navigate the Toronto real estate market for well over a decade.
Stay Curious. Stay Informed.
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This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.
Ralph Fox & Kori Marin
Kori and Ralph's love affair with Toronto Real Estate have spanned several decades! It is incredible to see how far their mad crazy passion for design, architecture and innovation has taken them, which is only the beginning of their bigger vision and relentless goal-setting! Kori and Ralph have created this forum for their readers to explore the good, the bad, and the sometimes ugly real estate. An honest perspective about the ins & outs of the business - one in which they live, work and experience first hand every day. Nothing is more interesting than the "real" in real estate!
