Best 5-Year Variable Mortgage Rates
Compare 5-year variable mortgage rates from some of Canada’s best lenders to ensure you’re getting a great deal.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.
Canadian variable mortgage rate update: April 2025
On April 16, 2025, the Bank of Canada announced that it would be holding its overnight rate at 2.75%. It was the Bank’s first rate hold after a series of seven consecutive cuts dating back to June 2024.
The Bank’s reasons for holding the overnight rate were the economic uncertainty caused by the U.S. tariff war and the risk of increasing inflation by lowering borrowing costs. (The overnight rate directly influences lenders’ prime rates.)
This isn’t spectacular news for home buyers, as variable mortgage rates will stay at their current levels until at least June 4, when the Bank makes its next rate decision. The lowest variable rates available are currently around 4%.
While variable rates may not improve in the next six weeks, home buyers have a few things working in their favour. Housing stock is piling up, which should take some pressure off of home prices, and Donald Trump’s tariff war may not be the extinction-level event many had feared.
If you have job security, it’s actually not a bad time to be looking for a home.
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.What is a 5-year variable mortgage rate?
If your mortgage rate is variable, the interest rate you may rise or fall over the course of your loan term. Compare this to a fixed-rate mortgage, which remains the same throughout the loan, regardless of whether the lender updates the rates it offers new borrowers.
The factors that lead lenders to change their rates usually involve the larger economic context. For example, if the Bank of Canada raises its overnight rate, you can expect your lender to follow suit. If the BoC lowers its rate, your variable rate will likely fall.
This uncertainty creates a risk for borrowers, which is why you’ll typically find variable mortgage rates to be lower than fixed rates. That difference, of course, isn’t guaranteed to last. During times of high inflation, variable rates can surge past fixed rates. A BoC study showed that median payments for borrowers who opened a variable-rate mortgage in February 2022 had risen 70% by November 2023.
What’s the best variable mortgage rate?
Short answer: The “best” variable mortgage rate is the lowest rate you can qualify for on the specific loan product that best fits your finances. The best rate available to one person depends largely on their financial profile, which includes credit score, income and other debts. As a result, there’s no way to determine a “best” or “average” rate that applies to everyone.
Historical variable rate trends
While it’s tempting to compare today’s rates to rates of the past, it’s a fruitless exercise. Just look at the following Statistics Canada data from the past 10 years, which tracks the average variable mortgage rate on insured mortgages in August of each year. The variable mortgage rates available in August 2019 probably seemed really high compared to rates available in the preceding years. But today, those same 2019 rates look pretty sweet. It’s just a matter of perspective.
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Pros and cons of variable mortgage rates
Pros
- Lower rates. This isn’t guaranteed, but variable rates have historically been lower than fixed mortgage rates.
- Lower prepayment penalties. Variable-rate mortgages generally charge lower penalties than fixed-rate mortgages if you prepay too much of your mortgage or break your mortgage contract in some other way.
- Switchability. If you’re afraid rising rates will lead to you being unable to make your payments, you may be able to switch to a fixed rate of interest for the remainder of your mortgage term.
Cons
- Unpredictability. If variable mortgage rates rise, your mortgage payment could become unaffordable.
- Smaller prepayment penalties still sting. If you break a variable-rate mortgage because of financial difficulties, the penalty could equal three months’ interest.
- No portability. Your lender may bar you from porting a variable-rate mortgage unless you convert it to a fixed-rate mortgage. If you switch, you may not be able to afford your lender’s current mortgage rates.
How to choose between fixed and variable rates
When you compare fixed- and variable-rate offers, don’t stop at comparing what payments would look like today. Work with your lender or use a mortgage calculator to see what the benefit of falling rates would look like — and what it would look like if rising rates were to make your monthly payment go up.
Who variable rates are best for
Choosing a variable-rate mortgage comes with a risk — that your payments will rise. Because variable rates tend to be lower than fixed rates, you’d benefit if rates stay the same or fall during your mortgage term. The more confident you are that this will happen, the more you may consider a variable rate. In addition, a person who chooses a variable rate should be in a financial position to pay a larger amount if rates end up rising. If your initial mortgage payment is already stretching your housing budget, a variable-rate mortgage may be too risky, even if you are confident that rates will fall.
Explore posted and discounted rates at Big Six banks
Sources
NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.
- Bank of Canada. The impact of higher interest rates on mortgage payments. Accessed Nov 14, 2024.
- Statistics Canada. Funds advanced, outstanding balances, and interest rates. Accessed Nov 14, 2024.
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Clay Jarvis
Clay Jarvis
Clay Jarvis