Reverse mortgage rates fall in Canada as regular mortgage rates rise

Canadian reverse mortgage rates fell 0.25% in July 2026, driven by lender competition rather than a bond-market move or Bank of Canada cut. The drop has pushed reverse mortgages to a rare low gap versus regular mortgages and HELOCs, though the pricing may not last.

Why it matters: - Reverse mortgage borrowers in Canada are seeing one of the tightest pricing gaps in recent memory versus regular mortgages and HELOCs. - The move could make reverse mortgages more attractive for homeowners 55 and over who need to turn home equity into cash. - The pricing change may be temporary if lenders pull back after hitting new business targets.

What happened: - Reverse mortgage rates fell 0.25% across almost every lender in Canada in July 2026. - Home Trust cut its 5-year fixed reverse mortgage rate to 6.29% in early July 2026. - Equitable Bank followed soon after and lowered its 5-year fixed reverse mortgage rate to 6.28%. - Regular mortgage rates moved higher over the same period. - The Bank of Canada left its policy rate unchanged.

The details: - The rate cuts were driven by lender competition, not by lower bond yields. - 5-year fixed rates usually track the 5-year Government of Canada bond yield. - That yield has risen about 0.2% since the start of 2026. - Reverse mortgage rates typically run 2% to 2.5% above regular mortgage rates. - Four of the Big Five banks are offering regular 5-year fixed mortgage rates around 4.29%. - TD is offering a regular 5-year fixed rate of 4.59%. - The gap between reverse mortgage rates and regular mortgage rates is now at the low end of the usual range, and in some cases slightly below it. - Reverse mortgage rates can also be compared with HELOC pricing. - HELOCs are sitting at roughly prime plus 1%, or 5.45%, with the Bank of Canada on hold. - The current reverse mortgage gap versus a HELOC is just over 0.8%, down from a little more than 1%. - ReverseMortgagePros.ca/Assessment offers a free, no-obligation assessment for homeowners 55 and over to compare options, lenders and hidden costs. - The company also points readers to Reverse Mortgage Pros for the assessment.

Between the lines: - Home Trust is the newest lender in Canada’s reverse mortgage market and appears to be using aggressive pricing to win market share. - Established lenders are following the cut rather than losing volume. - That suggests a short-term price war, not a broad shift in borrowing costs. - Lenders that cut rates to gain business often have a volume target in mind, such as $100 million or $200 million in new deals. - Home Trust has no prior track record in this market to indicate how long the discounting will last. - Mich Sneddon said the move was “a lender trying to win business” rather than a bond-market reaction. - Sneddon also said homeowners should assess their options now rather than wait for the window to close.

What's next: - Reverse mortgage rates could rise again once lenders hit their volume goals. - Borrowers considering a reverse mortgage may want to act while the current gap remains open. - Market watchers will be looking to see whether other lenders respond with further cuts or move back toward normal pricing.

The bottom line: - Canada’s reverse mortgage market is unusually competitive right now, and that has briefly improved pricing for borrowers. The discount may not last if lenders decide they have won enough business.