Reverse mortgage rates fall in Canada as regular mortgage 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 drop, led by a pricing push from Home Trust and quickly matched by Equitable Bank, has narrowed the gap between reverse mortgages, regular mortgages and HELOCs to a rare level.

Why it matters: - The latest reverse mortgage pricing gives homeowners 55 and over a shorter-lived but more competitive financing window. - The drop has pushed reverse mortgage rates to the low end of their usual premium over regular mortgages and HELOCs. - For borrowers weighing whether to tap home equity, the change could affect monthly costs and the timing of an application.

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

The details: - Reverse mortgage pricing usually tracks the 5-year Government of Canada bond yield. - That yield has risen about 0.2% since the start of 2026. - The recent reverse mortgage drop did not come from falling bond yields. - Home Trust is the newest lender in Canada's reverse mortgage market. - The rate cuts appear to reflect competition for market share, with one lender lowering pricing to win volume and rivals 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 5-year fixed mortgage rates around 4.29%. - TD is offering a 5-year fixed mortgage rate of 4.59%. - The current spread between reverse mortgage rates and regular mortgage rates is at the bottom of the normal range and, in some cases, slightly below it. - Reverse mortgage rates can also be compared with HELOCs. - HELOCs are priced at roughly prime plus 1%, or about 5.45%, while the current reverse mortgage spread is just over 0.8% above a HELOC. - That spread had been a little more than 1% before the latest rate move. - Mich Sneddon, founder of Reverse Mortgage Pros, said the move was driven by lender competition rather than market rates. - Sneddon said homeowners should understand why the pricing is happening before assuming it will last. - Sneddon also said homeowners who are house rich and cash poor may want to look at the current window before it closes. - Reverse Mortgage Pros offers a free, no-obligation assessment for homeowners 55 and over at ReverseMortgagePros.ca/Assessment. - Reverse Mortgage Pros also lists its social channels and review pages, including LinkedIn, Instagram, Facebook, YouTube, X, and Trustpilot.

Between the lines: - This looks like a lender-driven pricing war, not a broad shift in borrowing costs. - Because the move is not tied to bond yields, the lower rates may not stick. - Lenders that cut rates to gain business often have a volume target, after which pricing can move back up. - Home Trust has not done this before, so the market has little history to show how long the discount may last.

What's next: - Lenders are likely to keep watching each other closely as they compete for reverse mortgage volume. - If the pricing target for the latest cuts is reached, rates could rise again. - Homeowners considering a reverse mortgage may want to compare options sooner rather than wait for the market to settle.

The bottom line: - Reverse mortgage rates in Canada are unusually low relative to both regular mortgages and HELOCs, but the discount may be temporary.