Reverse mortgage rates fall in Canada as regular mortgage rates rise

Reverse mortgage rates in Canada dropped 0.25% in July 2026 after a lender-led price cut, even as regular mortgage rates moved higher and the Bank of Canada held steady. The shift narrows the gap between reverse mortgages, standard mortgages and HELOCs, but the pricing may not last.

Why it matters: - Reverse mortgage rates are now at one of their tightest spreads versus regular mortgages in recent memory. - The lower rates could make reverse mortgages more attractive for homeowners 55 and older who want to tap home equity. - The pricing gap versus HELOCs also narrowed, changing the comparison for borrowers weighing different ways to access cash.

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 by 0.25% to 6.29%. - Equitable Bank followed quickly and lowered its 5-year fixed 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 move was driven by lender competition, not by a drop in 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%. - Reverse mortgage rates now sit at the low end of their normal spread, and in some cases slightly below it. - Against HELOCs, reverse mortgage rates are now just over 0.8% higher. - HELOCs are sitting at roughly prime plus 1%, or 5.45%, with the Bank of Canada holding steady. - The spread to HELOCs has narrowed from a bit more than 1%.

Between the lines: - Home Trust is the newest lender in Canada’s reverse mortgage market, and the lower pricing looks aimed at winning share. - Established lenders appear to be matching the cut rather than lose volume. - Sneddon said the move was a lender push for business, not a normal bond-market response. - The pattern suggests lenders may be chasing volume targets, which often causes temporary price cuts. - Home Trust has no prior track record in this market to indicate how long the pricing will hold.

What's next: - The current pricing may not last because it was not driven by underlying bond-market moves. - Rates could move back up once lenders hit their volume targets. - Homeowners considering a reverse mortgage may want to compare offers before the window closes. - Reverse Mortgage Pros is offering a free, no-obligation assessment at ReverseMortgagePros.ca/Assessment. - The assessment is aimed at homeowners 55 and over and is designed to compare options, lenders and hidden costs.

The bottom line: - Reverse mortgage borrowers in Canada are seeing a rare pricing edge, but the advantage looks temporary and tied to lender competition rather than a broad rate shift.