Reverse mortgage rates in Canada fall as regular mortgage rates rise

A competitive push among Canadian lenders has cut reverse mortgage rates by 0.25% in July 2026, even as regular mortgage rates climbed and the Bank of Canada stayed on hold. The move has narrowed the gap between reverse mortgages, standard mortgages and HELOCs to rare levels, but the pricing may not last.

Why it matters: - Canadian homeowners age 55 and over are seeing reverse mortgage pricing improve at the same time regular borrowing costs are rising. - The gap between reverse mortgage rates and standard mortgage rates has fallen to the low end of its usual range. - The gap versus HELOC rates has also tightened, which could make reverse mortgages more competitive for cash-strapped homeowners.

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 by 0.25% to 6.29%. - Equitable Bank quickly followed with a 5-year fixed rate of 6.28%, just below Home Trust. - Regular mortgage rates did not fall alongside reverse mortgage rates. They moved up. - The Bank of Canada left its policy rate unchanged.

The details: - Five-year fixed rates usually move with the 5-year Government of Canada bond yield. - That bond yield has risen roughly 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 typically run 2% to 2.5% above regular mortgage rates. - The current reverse mortgage spread is now under 2% in some cases. - HELOCs are sitting at roughly prime plus 1%, or 5.45%. - Reverse mortgage rates are now just over 0.8% above a HELOC, down from a gap that had been a little more than 1%. - ReverseMortgagePros.ca/Assessment offers homeowners 55 and over a free, no-obligation assessment in about 90 seconds to compare options, lenders and hidden costs. - Mich Sneddon, founder of Reverse Mortgage Pros, said the move was a lender-driven bid for business rather than a bond-market shift.

Between the lines: - Home Trust appears to be using aggressive pricing to win market share in a newer, more competitive reverse mortgage market. - Established lenders are following the cut rather than risk losing volume. - The price drop looks tactical, not structural, because it was not driven by lower bond yields. - Rate cuts tied to volume goals often reverse once lenders hit their target. - Home Trust does not have a prior track record in this market, so the duration of the cut is hard to forecast.

What’s next: - Reverse mortgage pricing could move back up if lenders reach their deal targets. - The current window may be short-lived if competition cools. - Homeowners considering a reverse mortgage may want to compare options while the spread remains unusually narrow.

The bottom line: - Reverse mortgage rates in Canada have briefly become more attractive because lenders are competing for business, not because borrowing conditions broadly improved.