Two kinds of variable mortgage, and most people don't know which they have
An adjustable-rate mortgage moves the payment when prime moves. Rates go up, the payment goes up, the amortization stays on schedule. Uncomfortable, and structurally sound.
A variable-rate mortgage with a fixed payment keeps the payment the same. What moves is the split between interest and principal inside it. Rates go up, more of your payment goes to interest, less goes to the loan, and the mortgage takes longer to pay off. About three-quarters of Canadian variable-rate mortgages are this kind. Most people who have one believe they were simply lucky between 2022 and 2023.
Here is the test. When prime went up a long way in 2022 and 2023, did your payment change? If it didn't, this page is about you.
The trigger rate
The Bank of Canada's own definition: "the interest rate at which the interest portion of the payment equals the total payment amount, and therefore the principal portion is zero." At that rate every dollar you pay is interest and the balance does not move. Past it, again in the Bank's words: "the interest payment is permitted to exceed the total mortgage payment. Principal payments are therefore negative, so the balance owed on the mortgage increases from month to month." That is negative amortization. You pay every month and you owe more than you did last month.
The trigger point is a different thing
People mix these up constantly. The trigger rate is about interest swallowing the payment. The trigger point is about the balance getting too big — typically when it reaches 80% of the property's value on an uninsured mortgage, 105% on an insured one, or exceeds the original principal. Hitting the trigger point is the more serious of the two, because at that threshold the lender is obliged to intervene rather than merely permitted to. Intervention usually means a required payment increase or a lump sum.
What your lender does is in your contract and nowhere else
There is no single national rule. Some lenders let the balance grow. Some raise the payment automatically to cover at least the interest. Some contact the borrower and offer options — a lump sum, a payment increase, converting to a fixed rate. Which one applies to you is contractual, specific to your mortgage, and not on any government website. Ask your lender, in writing, what happens if your mortgage reaches its trigger rate and what your current trigger rate is.
History, not a current statistic
In October 2022 the Bank of Canada estimated that about half of fixed-payment variable mortgages had already reached their trigger rate — roughly 13% of all Canadian mortgages. With prime at 4.45% today, far below its 2023 peak, very few borrowers are anywhere near theirs. The risk is currently dormant, and the 42% of borrowers choosing variable in February 2026 are quietly rebuilding exposure to it.
