Reverse mortgage rates fall in Canada as regular rates rise

Reverse mortgage rates in Canada fell 0.25% in July 2026, even as regular mortgage rates moved higher and the Bank of Canada held steady. The unusual gap reflects lender competition, not market-wide borrowing costs, and may not last.

Why it matters: - Reverse mortgage pricing is now near the low end of its usual spread versus regular mortgages. - The narrower gap may give homeowners 55 and over a short-lived window to lock in better terms. - The move also signals a competitive shift in a small lender market, not a broad drop in borrowing costs.

What happened: - Reverse mortgage rates fell 0.25% across almost every lender in Canada in July 2026. - Home Trust, the newest Canadian reverse mortgage lender, cut its 5-year fixed rate by 0.25% to 6.29%. - Equitable Bank followed quickly and lowered its rate to 6.28%. - Regular mortgage rates moved the other way during the same period. - The Bank of Canada left its policy rate unchanged.

The details: - Five-year fixed rates usually track the 5-year Government of Canada bond yield. - That bond yield has risen about 0.2% since the start of 2026. - Regular mortgage rates have followed that move higher. - Reverse mortgage rates did not follow the bond market this time. - Mich Sneddon, founder of Reverse Mortgage Pros, said the move was driven by lender competition and a push for market share. - Sneddon said Home Trust is willing to give up margin to win volume, and other lenders are following to avoid losing business. - 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 4.59% on a regular 5-year fixed mortgage. - Today's reverse mortgage rates put the spread at the bottom of the usual range, and in some cases slightly below it. - Reverse mortgage rates can also be compared with HELOC pricing. - HELOCs are running at roughly prime plus 1%, or about 5.45%, because the Bank of Canada held its rate steady. - The latest reverse mortgage pricing puts the gap at just over 0.8% above a HELOC, down from a little more than 1%. - ReverseMortgagePros.ca/Assessment offers homeowners 55 and over a free, no-obligation assessment to compare options, lenders, and hidden costs.

Between the lines: - This is a price war, not a rate-cycle shift. - Because the drop was not tied to bond yields, the lower pricing is less likely to last. - Lenders often cut rates to hit a target for new business, such as $100 million or $200 million in volume. - Home Trust has no prior track record in this segment, so the duration of the move is unclear. - Sneddon said homeowners considering a reverse mortgage should act while the window is open rather than wait for a better rate that may disappear.

What's next: - Reverse mortgage rates could move back up once lender volume targets are met. - The current gap versus regular mortgages and HELOCs will likely depend on whether Home Trust keeps pushing for market share. - Homeowners 55 and over can use a quick assessment to see whether a reverse mortgage now fits their needs.

The bottom line: - Canada’s reverse mortgage market is offering an unusually competitive rate break, but the discount looks more like a temporary lender tactic than a new normal.