Best 3-Year Fixed Mortgage Rates
Compare 3-year fixed mortgage rate offers from Canada's top lenders and brokers.8Twelve has partnered with over 65 Canadian mortgage lenders to provide competitive rates on over 7,000 mortgage products. 8Twelve can quickly match you with a lender and mortgage type that meets your needs — even if your financial situation is unique.
Fixed mortgage rate news: April 2025
If you’re a home buyer disappointed that the Bank of Canada didn’t help lower variable mortgage rates on April 16, 2025, know that fixed mortgage rates remain fairly approachable.
As of April 16, some brokerages were offering three-year fixed rates for around 3.7% and five-year fixed rates for about 3.75%. Those aren’t mind-blowingly low rates, but they might be as good as they’re going to get for the time being.
Government bond yields, which help determine lenders’ fixed mortgage rates, have been in the same general range since February. Without a significant, sustained dip in yields, lenders won’t have much reason to lower their fixed rates.
But that doesn’t mean they aren’t open to negotiation. With so many home buyers sitting on the sidelines, the mortgage market has been quiet this year, and lenders are hungry for business. Use the lack of demand to your advantage and negotiate hard for the best rate you can.
Read more about the Bank of Canada's latest rate announcement.
The BoC makes policy interest rate announcements eight times a year. Here's what you need to know.3-year fixed mortgages: The basics
What is a 3-year fixed mortgage rate? | A 3-year fixed mortgage lasts for three years, and the mortgage rate does not change during that time. |
|---|---|
What is the best 3-year mortgage rate? | As of September 5, 2024, some lenders were offering three-year fixed-rate mortgages for around 4.6%. The rate you’re offered will be based on your credit score, down payment amount and home purchase price. |
Are 3-year fixed mortgages popular? | One way to measure popularity is by tracking the amount of money people borrow via mortgages of that term length. -In May 2022, Canadians borrowed $872 million in mortgages of at least 3 years but not more than 5 years. -In May 2023 that number nearly tripled, to $2.427 billion. -In May 2024, the amount increased again — by almost a billion — to $3.31 billion. |
How do 3-year mortgage rates compare to 5-year rates? | Five-year fixed mortgages have historically been Canada’s most popular type of mortgage. As of September 2024, five-year rates were generally a bit lower than three-year rates. |
Is getting a 3-year fixed mortgage a good idea? | Take into account your personal goals and needs when choosing a mortgage. How long do you expect to be in your home? How predictable do you need your mortgage payment to be? These are just a few questions worth asking. |
Note: All figures represent total new funds advanced via insured fixed-rate mortgages. Data collected by Statistics Canada. | |
Pros and cons of 3-year fixed mortgage rates
Pros
😯 No surprises with your monthly cost. You’ll know what your mortgage payments will be for a full three years, which can make budgeting and long-term financial planning easier.
🗓️ Term length could be a good fit. A “good” term length really depends on each person’s particular situation. That said, a three-year term could be a good fit if you think you might move or sell if you took out a mortgage with a longer term, which could cost you more in prepayment penalties.
💡 Easy to understand. Fixed-rate mortgages are as set-it-and-forget-it as mortgage products come. You shouldn’t have to think about your mortgage until it’s time to renew.
Cons
🙃 Life happens. It’s hard enough to know what will happen tomorrow, let alone three years from now. Staying in the same home for that long may not be feasible. If you have to move, for example, you might have to break your mortgage.
💸 You’ll face penalties if you sell before your term is up. Breaking a fixed-rate mortgage can result in you paying pre-payment penalties. They can be especially disruptive if you aren’t selling your house and don’t have an infusion of cash to fall back on.
📉 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.
Fixed mortgage rate history
Factors that affect Canadian 3-year fixed mortgage rates
Two factors determine the three-year fixed mortgage rates you’re offered: the government bond market and your finances.
The bond market
Here’s a simple way of thinking about it: when the yield on three-year government bonds go up or down, three-year fixed mortgage rates eventually follow suit. The same goes for two- and five-year bonds and fixed mortgage rates that correlate with those terms.
Your financial situation
The bond market influences fixed mortgage products, but the actual rate you’re offered depends on your financial situation, including:
Your credit score. The better your credit score, the less risk you pose as a borrower.
Your down payment amount. Making a larger down payment means applying for a smaller mortgage, which creates less risk for your lender, and can help reduce or eliminate mortgage insurance payments.
Other debts you may have. If you’re carrying a heavy debt load, lenders may question your ability to pay them back.
Best mortgage rates in Canada
Compare offers from Canada’s top mortgage lenders and brokers.
How to choose the best type of 3-year mortgage
When choosing a mortgage, the interest rate is just one factor. There are other aspects you need to consider before deciding on the final make-up of your mortgage. Some are general and apply to all home loans, others are more specific to fixed-rate mortgages.
Amortization length
Amortization refers to the total amount of time it will take you to pay off your mortgage in full.
Some borrowers opt for shorter amortization periods (the standard is 25 years) because it means paying less interest overall. But that does mean higher monthly payments. Longer periods mean smaller payments, but you’ll pay more in total interest over time.
Portability
Porting a mortgage occurs when a lender allows a homeowner to transfer their existing mortgage to a new house — a process that avoids a high prepayment penalty. If you think you might move during your mortgage’s term, ask lenders about their porting policy.
You can only port a mortgage with the lender you originally signed your mortgage contract with.
Open vs. closed mortgages
Prepayment penalties are the fees lenders may charge if you pay off all or part of your mortgage before the end of its term.
You can avoid these fees with an open mortgage, but you’ll likely pay a higher rate. Closed mortgages, which are more common, often allow some prepayments before penalties kick in.
Fees
Closing costs are fees that can add thousands to the amount of cash you need upfront, which may lower the amount available for your down payment.
Work with your lender or mortgage broker early in the mortgage application process to set realistic expectations.
Alternatives to 3-year fixed mortgages
Variable-rate mortgage
A variable-rate mortgage might offer a lower interest rate and generally has fewer penalties if you break your mortgage or refinance during your mortgage term.
Most lenders will allow you to switch to a fixed rate for the remainder of your term.
Different term lengths
Both shorter and longer term fixed-rate options are available. In fact, the most common mortgage type in Canada has historically been a five-year term.
What’s a good 3-year fixed mortgage rate?
The short answer: A good 3-year fixed mortgage rate is the lowest rate you can qualify for based on the amount you need to borrow and the specific loan features that best fit your finances.
The longer answer to this question requires some historical context. According to the Bank of Canada, the average 3-year mortgage rate posted by Canada’s major chartered banks was:
6.89% on August 16, 2023.
5.64% on August 17, 2022.
3.75% on August 21, 2013.
5.65% on August 20, 2003.
8.25% on August 11, 1993.
13% on August 17, 1983.
Compared to the past decade, mortgage rates seem high. Compared to rates Canadians have paid in the past few decades, rates look average.
Forecasting 3-year fixed mortgage rates
Canada’s three-year fixed mortgage rates can be hard to predict with any accuracy, especially over the long-term. Even short-term fixed-rate predictions can be tricky.
If you notice a sustained upward or downward trend in the three-year government bond yield, history tells us that three-year fixed mortgage rates tend to move in the same direction. But when they’ll move, how much they’ll fluctuate, and how long they’ll stay at their new level is hard to pinpoint.
How to qualify for the best 3-year fixed mortgage rates
Though lenders may have different mortgage qualification criteria, there are some time-tested ways to qualify for the lowest mortgage rate.
Improve your credit score
The best mortgage rates generally go to borrowers with a credit score of 680 and higher. You’re still likely to be considered for a mortgage with a score of 600 and above, you just may not necessarily be offered the best rates.
Maintain low debt service ratios
Lenders look at two debt service ratios when reviewing mortgage applications: Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
GDS ratio: the percentage of your pre-tax household income that goes toward housing costs (mortgage payments, utilities and property taxes). Your GDS ratio should not exceed 39% of your yearly gross income.
TDS ratio: your GDS plus any other debts, including student loans and credit card debt. Your TDS ratio should not be more than 44% of your pre-tax household income.
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 worthy of a lower interest rate.
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.
How to shop for the best 3-year fixed mortgage rates
Getting the lowest rate possible can significantly lower the overall cost of your mortgage. Shaving 0.3% off of a three-year fixed mortgage rate can save tens of thousands of dollars.
Here’s an example:
Home price: $400,000.
Down payment: $80,000.
Mortgage amount: $320,000.
Amortization: 25 years.
A 5.5% rate would result in $265,975 in total interest over the course of the mortgage.
A 5.2% rate would result in $249,320 in interest — a difference of $16,655.
Use APR for accurate 3-year fixed mortgage rate comparisons
The best way to get the best rates is to get offers from multiple lenders, or to work with a mortgage broker who can do this work for you.
When comparing mortgage rates, compare annual percentage rates (APRs) — not just the advertised interest rates. The APR combines the interest rate, fees and other closing costs set by the lender into a number that represents the complete cost of the mortgage.
Average fixed mortgage rates from Canada’s chartered banks
The following rates apply to conventional mortgages, or those based on down payments of 20% or more. These rates do not include the discounted rates you may see elsewhere on this page.
TERM | Conventional Mortgage Rates |
|---|---|
1-year fixed | 6.09% |
3-year fixed | 6.54% |
5-year fixed | 6.49% |
Prime Rate | 4.95% |
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.
Frequently asked questions
Is a 3-year fixed mortgage rate a good idea?
Is a 3-year fixed mortgage rate a good idea?
Three-year fixed-rate mortgages can be a good idea in a few scenarios. If you think you might move before the end of a five-year mortgage term, opting for three years might save you from paying a pre-payment penalty. If rates fall during a three-year term, you’ll have a better chance of renewing at a lower rate than if you signed on for five-years.
What's a good 3-year fixed mortgage rate?
What's a good 3-year fixed mortgage rate?
As of April 2025, you can find three-year fixed rate offers for around 3.7% at some mortgage brokerages.
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Clay Jarvis
Clay Jarvis
Clay Jarvis