Reverse mortgage rates fall in Canada as regular mortgage rates rise

Reverse mortgage rates in Canada dropped 0.25% in July 2026 even as regular mortgage rates moved higher and the Bank of Canada held steady. The pricing shift, led by Home Trust and quickly matched by Equitable Bank, has narrowed the gap between reverse mortgages, standard mortgages and HELOCs to a rare low.

Why it matters: - Reverse mortgage borrowers in Canada are seeing a rare pricing break at the same time standard borrowing costs are drifting higher. - The tighter spread between reverse mortgages, regular mortgages and HELOCs could make home equity borrowing more competitive for Canadians 55 and older. - The latest move may be temporary, since it came from lender competition rather than from a broader drop in market rates.

What happened: - Reverse mortgage rates fell 0.25% across almost every lender in Canada in July 2026. - Home Trust, the newest lender in Canada’s reverse mortgage market, cut its 5-year fixed rate to 6.29%. - Equitable Bank followed with a 5-year fixed rate of 6.28%, undercutting Home Trust by 0.01 percentage points. - Regular mortgage rates moved in the opposite direction over the same period. - The Bank of Canada made no rate change.

The details: - Five-year fixed rates usually move with the 5-year Government of Canada bond yield. - That bond yield has risen about 0.2% since the start of 2026. - Four of the Big Five banks are offering regular 5-year fixed mortgage rates around 4.29%. - TD’s regular 5-year fixed rate is 4.59%. - Reverse mortgage rates are normally 2% to 2.5% above regular mortgage rates. - The current gap is at the low end of that range and, in some cases, slightly below it. - HELOC pricing is roughly Prime plus 1%, or about 5.45%, while reverse mortgage rates are now a little more than 0.8% above HELOC rates. - That HELOC gap is narrower than the little-more-than-1% spread seen before the latest drop. - Mich Sneddon, founder of Reverse Mortgage Pros, said the move was driven by a lender trying to win business and by other lenders following suit. - Sneddon also said the market reaction was not the result of normal bond-market pricing.

Between the lines: - The rate cut looks like a competitive push for market share, not a broad reset in borrowing costs. - Newer lenders can pressure the market by accepting thinner margins to attract volume. - Established lenders often match those moves to avoid losing deals. - Because the drop was not tied to bond yields, the lower pricing is less likely to last. - Sneddon said lenders often set a volume target, such as $100 million or $200 million in new deals, and rates can rise again after that target is reached. - Home Trust has no prior track record in this market, so the duration of its pricing strategy is unclear.

What's next: - Reverse mortgage pricing could move back up if lender targets are met or if competition eases. - Homeowners considering a reverse mortgage may want to compare offers now rather than wait for a better rate that may not stick. - Reverse Mortgage Pros is offering a free, no-obligation assessment for homeowners 55 and over at ReverseMortgagePros.ca/Assessment.

The bottom line: - Reverse mortgage rates in Canada are unusually low relative to standard mortgages and HELOCs, but the window may be short.