About 1-Year Fixed Mortgages
The 1-year fixed is the shortest fixed term Canadian lenders offer. It's used almost exclusively in two scenarios: you're renewing and expect to refinance or switch lenders within a year, or you believe rates will drop materially in 2026–2027 and don't want to commit beyond twelve months.
1-year fixed rates are usually the lowest of the fixed family, but the gap to a 3-year or 5-year has narrowed considerably in 2026 because the yield curve has flattened. Once you compare advertised rates, the savings versus a 3-year may be only 0.10–0.20% — sometimes not enough to justify the renewal risk.
Important: a 1-year fixed renews in twelve months at whatever rates exist at that time. If the Bank of Canada is on hold or hiking when you renew, you could face a meaningfully higher payment. Run a stress scenario before choosing this term.
Pros
- Lowest fixed rate available (in normal yield curves)
- Maximum flexibility — full renegotiation in 12 months
- Smallest break penalty
Cons
- Renewal risk — your rate is fully exposed in 12 months
- Many lenders quote it less aggressively than longer terms
- Stress-test still uses contract rate + 2%, so qualifying rate isn't dramatically lower
Who it suits: Renewers who plan to refinance within a year, or borrowers strongly betting on near-term rate cuts.