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The best mortgage rates from Canada’s Big 6 banks
Click on a bank’s name to see a full list of its posted and discounted mortgage rates.
Average fixed mortgage rates in Canada
The following table includes posted conventional mortgage rates, or those based on down payments of 20% or more, at Canada’s chartered banks. They do not include discounted mortgage rates. Prime rate is included as a reference point; it doesn’t typically impact fixed mortgage rates.
| TERM | CONVENTIONAL MORTGAGE RATES |
|---|---|
| 1-year fixed | 7.24% |
| 3-year fixed | 6.54% |
| 5-year fixed | 6.49% |
| Prime rate | 5.45% |
Based on average weekly conventional mortgage interest rates posted by the major chartered banks. Data source: Bank of Canada.
Fixed mortgage rate news: December 2024
Compared to variable mortgage rates, which continue trending downward, fixed mortgage rates are almost impossibly static. They’ve barely budged over the last several weeks.
Bond yields, which generally determine fixed mortgage rates, have been falling steadily since November 21. Lenders, however, haven’t improved on their fixed rate offers. One reason could be that lenders don’t want to dissuade borrowers from opting for more expensive variable-rate mortgages. They may also be selling just enough fixed-rate mortgages at today’s rates that they don’t feel a need to roll out more competitive offers.
The mortgage professionals NerdWallet’s spoken to over the past month don’t expect fixed rates to fall by much in the coming months. They may even increase. It all depends on how bond investors respond to future economic conditions. If they buy them up, yields — and fixed
Forecasting 5-year fixed mortgage rates
Based on recent downward movement in government bond yields, which typically determine fixed mortgage rates, lenders are in a position to decrease their five-year fixed mortgage rates in early 2025. But the mortgage brokers NerdWallet spoke to in November 2024 don’t expect fixed rates to fall much in the coming months.
Five-year fixed rates can be hard to predict with any accuracy over the long-term — even for analysts. It’s even harder for the average consumer to pinpoint when they’ll move, how much they’ll fluctuate, and how long they’ll stay at their new levels.
Calculators to inform your next mortgage decision
Understanding 5-Year Fixed Mortgage Rates
Factors that determine 5-year fixed mortgage rates
Lenders typically set their fixed mortgage rates based on government bond yields. Five-year fixed mortgage rates are tied to five-year bonds.
Simply put, when the yield on five-year government bonds rises or falls significantly, five-year fixed mortgage rates eventually follow suit. Fixed rates don’t change with every shift in yields. They generally only change after yields experience sustained movement in one direction or the other.
The bond market influences fixed mortgage rates in a broad sense, but the actual rate you’re offered depends on your overall financial situation. Lenders will consider:
- Your credit score. The higher your credit score, the less risk you pose as a borrower. Lenders are typically more willing to offer lower rates to borrowers who they believe will pay them back in full.
- Your down payment amount. A larger down payment means less risk for your lender. It may also signal an ability to manage your finances.
- Your debt service ratios. The lower your debt service ratios, the more creditworthy you’ll seem to lenders, who may reward you with a lower rate.
When the real estate market is slow and lenders are starved for new clients, the result can be highly-competitive rate offers.
This isn’t a common situation in Canada, but when business is sluggish, it’s not unusual for lenders to undercut each other by offering discounted rates. Just as homeowners might be flexible with their asking prices when buyers aren’t biting, lenders can be flexible with their rates when demand for mortgages weakens.
Pros and cons of 5-year fixed-rate mortgages
Pros
- Set costs. You’ll know what your mortgage payments will be for a full five years, which can make budgeting and long-term financial planning easier.
- Availability. Nearly all lenders offer five-year fixed-rate mortgages — an ideal condition for comparison shopping and negotiating.
- Easy to understand. Fixed-rate mortgages are as set-it-and-forget-it as mortgage products come. Sign it, make your payments and if all goes well you shouldn’t have to think about your mortgage until it’s time to renew.
Cons
- Life happens.Staying in the same home for five years may be unrealistic for you.
- Large penalties. Breaking a fixed-rate mortgage can result in hefty pre-payment penalties.
- No benefits if rates fall. If fixed mortgage rates decline during your term, you won’t be able to take advantage unless you break your mortgage.
5-year fixed mortgage rates vs. variable mortgage rates
| 5-year fixed mortgage rates | Variable mortgage rates | |
|---|---|---|
| Cost | Historically, higher than variable rates. The opposite can be true during periods of high inflation. | Typically lower than fixed rates. High inflation has lead to periods when variable rates skyrocketed well past fixed rates. |
| Prepayment penalty risk | High. The prepayment penalties can be large. The likelihood of breaking your mortgage rises the longer your term gets. | Relatively low. The maximum prepayment penalty is three months’ interest. |
| Switchability | A fixed rate can’t be switched to a variable rate mid-term without breaking the mortgage. | A variable rate can be switched to a fixed rate for the remainder of the term without penalty. |
| Exposure to rate fluctuations | None. Your rate won’t change for the length of your term. | Significant. Your rate will change every time your bank’s prime rate increases or decreases. |
5 ways to get the best 5-year fixed mortgage rate
1. Improve your credit score
The best mortgage rates generally go to borrowers with credit scores of 680 and higher.
You’re still likely to be considered for a mortgage with a score of 600 and above, but you may have to apply with an alternative lender that charges higher rates.
2. Maintain low debt service ratios
Lenders look at two debt service ratios when reviewing mortgage applications.:
- Gross debt service ratio: The percentage of your pre-tax household income that goes toward housing costs.. It should not exceed 39% of your annual gross income.
- Total debt service ratio: The percentage of your pre-tax household income that goes toward housing costs plus your ongoing debts. Your TDS ratio should not be more than 44% of your annual pre-tax household income.
3. Increase your down payment
A larger down payment can work wonders for your mortgage.
- Proving you can save money may suggest to lenders that you are a low-risk borrower.
- You’ll borrow less, which decreases your overall mortgage costs.
- A down payment of 20% or more will free you from buying mortgage default insurance.
4. Compare rates among lenders and brokers
Lenders and mortgage brokers tend to advertise that they have the lowest rates. Confirm that for yourself by comparing as many different offers as you can handle.
Just make sure that you compare mortgage products that share similar characteristics, such as:
- Term length and amortization period.
- Annual percentage rates.
- Prepayment penalties and prepayment privileges.
- Portability.
- Whether it’s an open or closed mortgage.
If you’re unsure how to compare these details, consider reaching out to a few mortgage brokers and have them take care of the comparisons for you.
5. Negotiate
Never expect the first rate a lender or broker offers you to be the best they can do. Politely ask them to do better, and let them know that you’ll be looking at other options while they generate a fresh offer for you.
Negotiating rates doesn’t come naturally to everyone, but it’s a must when setting up your mortgage. Knocking a few basis points off your rate can save you thousands of dollars, so don’t sign anything until you’re sure you’ve gotten the lowest rate possible for your financial situation.
5-year fixed mortgage rate history
What’s a good 5-year fixed mortgage rate?
The short answer: A good 5-year fixed mortgage rate is the lowest rate you can qualify for. A good rate for one person might not be a good rate for another.
The longer answer to this question requires some historical context. According to the Bank of Canada, the average posted 5-year mortgage rate at Canada’s major chartered banks was:
- 6.49% on October 16, 2024.
- 5.19% on October 16, 2019.
- 4.79% on October 15, 2014.
- 5.84% on October 14, 2009.
- 6.5% on October 13, 2004.
- 8.0% on October 13, 1999.
- 9.9% on October 29, 1994
Compared to 2014, current five-year fixed rates are fairly high. But compared to what Canadians have paid over the past 30 years, five-year fixed mortgage rates are actually fairly average.
Fixed mortgage rates: A 12-month snapshot
Frequently asked questions about 5-year fixed mortgage rates in Canada
Fixed mortgage rates aren’t expected to decline as fast as variable rates for the rest of 2024, so locking in for five years could mean paying more interest than necessary for at least part of your mortgage term.
Some mortgage brokerages were offering five-year fixed mortgage rates slightly above 4% as of December 2024.
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