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Find the Best 3-Year Fixed Mortgage Rates In Canada

Find the right 3-year fixed mortgage rate for your home buying needs.

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Nerdy Insight: Three-year fixed rates have remained largely unchanged in May, and aren’t likely to experience any drastic swings in the near future. As of May 16, 2024, some lenders were still offering discounted three-year fixed rates slightly below 5%.

Showing 7 of 20 results

Term

Lender

Rate

Monthly Payment

 

3 Year Fixed Rate


Scotiabank

4.94%

$2,601.87

3 Year Fixed Rate


Desjardins

4.99%

$2,614.66

3 Year Fixed Rate


B2B Bank

5.09%

$2,640.33

3 Year Fixed Rate


Meridian

5.14%

$2,653.20

3 Year Fixed Rate


Manulife

5.14%

$2,653.20

3 Year Fixed Rate


FirstOntario Credit Union

5.19%

$2,666.11

3 Year Fixed Rate


MCAP

5.29%

$2,692.00

Disclaimer: The rates displayed do not include any taxes, fees, insurance, or other additional charges. These rates are estimates and are not guaranteed. The actual rate and loan terms you receive will depend on our partner’s assessment of your creditworthiness, loan amounts, and other relevant factors. Please note that any potential savings figures provided are estimates based on the information you and our advertising partners have provided. Terms and conditions apply.
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Posted fixed mortgage rates at Canada’s Big 6 banks

Rates updated: May 27, 2024

Bank

1-Yr Fixed Rate

3-Yr Fixed Rate

5-Yr Fixed Rate

8.09% 7.20% 7.04%
7.44% 6.99% 6.84%
7.84% 6.99% 6.84%
7.84% 6.95% 6.79%
7.84% 6.94% 6.79%
7.84% 6.99% 6.84%

Posted rates for closed mortgages with amortization under 25 years. Data source: Canada's major banks

Canadian fixed mortgage rate update: May 2024

As of May 16, 2024, three- and five-year government bond yields were trending downward, but not to the extent that lenders will feel pressured to lower their fixed mortgage rates. Lenders generally don’t hesitate to increase their fixed rates when bond yields rise, but they can be a little slower to follow suit when yields are dropping.

Borrowers should still be able to find both three- and five-year fixed mortgage rates below 5%. The spread between the two has decreased — three-year terms were much more expensive in 2023 — so the cost of choosing a three-year term as a means of accessing lower rates sooner is no longer as prohibitive.

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.

TERMCONVENTIONAL MORTGAGE RATES
1-year fixed7.84%
3-year fixed6.99%
5-year fixed6.84%
Prime rate7.20%

Fixed mortgage rates: A 12-month snapshot

Based on average weekly conventional mortgage interest rates posted by the major chartered banks. Data source: Bank of Canada

Calculators to inform your next mortgage decision

Introduction to 3-year fixed mortgage rates in Canada

If you have a three-year fixed-rate mortgage, your mortgage payments are locked in for three years, even if interest rates rise or fall during your term.

At the time you’re applying for a new mortgage or renewing an existing one, fixed mortgage rates have historically been higher than variable rates, which fluctuate along with a lender’s prime rate. That doesn’t mean that variable-rate mortgages are cheaper in the long term: If a bank’s prime rate rises during your term, your mortgage rate will rise, too.

How are Canadian 3-year fixed mortgage rates determined?

Two factors determine the three-year fixed mortgage rates you’re offered: the government bond market and your finances. 

The bond market

Financial institutions invest in government bonds — which are generally stable investments — to create a reliable profit flow. When interest rates rise, however, bond values decrease, and banks lose money. To offset this, banks will raise interest rates on fixed-rate mortgages.

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:

Is a 3-year fixed-rate mortgage right for you? 

When deciding if a fixed-rate mortgage of any length is right for you, consider the following:

Pros and cons of 3-year fixed-rate mortgages

Pros

Cons

How to choose the best 3-year fixed mortgage rate

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. In Canada, the longest amortization you can get with a down payment of less than 20% is 25 years. With a down payment greater than 20%, you can find an amortization of up to 35 years, though these are uncommon.

Some borrowers opt for shorter amortization periods because it means paying less interest overall. But that does mean higher monthly payments.

Fees

Discuss all the fees and additional costs with your lender or mortgage broker early in the mortgage application process. Doing so will give you more information to work with when comparing different mortgages.

Prepayment penalties

Prepayment penalties are fees you may incur if you pay off all or part of your mortgage before the end of its term. They’re an important consideration if you have to sell your home before the term expires.

The way a lender calculates prepayment penalties depends on your specific lender and mortgage contract. For fixed-rate mortgages, the penalty charge is usually the higher of:

Portability

Porting a mortgage occurs when a lender allows a homeowner to transfer the mortgage she had on a home she just sold to a newly purchased one. This allows the borrower to break a mortgage mid-term without having to pay a high prepayment penalty.

When you port a mortgage, you generally get to keep your current interest rate if your new mortgage is smaller than your original one. If your new mortgage is larger, you’ll likely be offered a blended mortgage, in which your previous mortgage rate is combined with your lender’s current market rate.

You can only port a mortgage with the lender you originally signed your mortgage contract with. 

Open vs. closed mortgages

Three-year fixed-rate mortgages in Canada are typically considered closed mortgages. With a closed mortgage, your contract terms are set for the duration of your mortgage term. Making changes to your payment schedule could mean breaking your mortgage contract and paying penalties.

Open mortgages allow borrowers a little more flexibility in how they pay back their loans. With an open mortgage, you can increase your payment frequency and make lump-sum payments without being charged any prepayment penalties. The interest rates on open mortgages tend to be higher than those attached to closed mortgages.

Alternatives to three-year fixed-rate mortgages

Choose a variable rate

A variable-rate home loan might offer a lower interest rate and generally have fewer penalties if you break your mortgage or refinance during your mortgage term. 

If your variable rate spikes during your term and you become worried that you won’t be able to make your mortgage payments, most lenders will allow you to switch to a fixed rate for the remainder of your term.

Choose a different term

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.

Shorter-term mortgages often have lower rates than longer-term rates, but if demand for these products is high, like it has been at points throughout 2023, they may creep higher than the rates attached to loans with longer terms.  

What happens at the end of your 3-year mortgage term?

As the three-year mark approaches, you’ll have several options: renew, refinance or replace.

If you elect to renew your mortgage, your lender will send you a renewal statement that contains details of your renewed contract, such as the term and interest rate. If all looks good, you simply sign the document and your mortgage will continue on seamlessly.

But if you’re not entirely happy with the new mortgage contract — maybe you want a lower interest rate or a shorter amortization period — you could try to refinance your agreement to get more favourable terms.

You also have the option of comparing current mortgage rates and going with a new lender. While you might get a better rate with a new lender, keep in mind that there may be additional costs, such as setup and appraisal fees.

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:

Fixed mortgage rates rose substantially during the second quarter of 2023, and should continue stretching home buying budgets for the rest of the year. Looking back over the past decade, mortgage rates in 2023 are actually quite high.

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 levels is hard to pinpoint.

How to qualify for the lowest 3-year fixed mortgage rate

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. Lenders perceive borrowers with high credit scores as lower risk. 

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 will look at two debt service ratios when deciding whether or not to give someone a mortgage with the best rates: Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.

Your GDS ratio is the percentage of your pre-tax household income that goes toward housing costs, which include not only mortgage payments but also utilities and property taxes. Your GDS radio should not exceed 39% of your yearly gross income.

Your TDS ratio includes your GDS, plus any other debts you are carrying, including student loans and credit card debt. Your TDS ratio should not be more than 44% of your pre-tax household income. 

The lower your ratios are, the better chance you have of getting the most favourable mortgage rates.

Increase your down payment

Saving a larger down payment isn’t always easy, but making a bigger initial payment can work wonders for your mortgage.

You’ll borrow less, which will decrease your overall mortgage costs. And by proving you can save money and prioritize homeownership, lenders may see you as less risky and worthy of a lower interest rate.
Making a significant down payment of 20% or more will free you from having to buy mortgage default insurance, too, an ongoing cost that otherwise gets added to your monthly mortgage payments.

Why it’s important to compare 3-year fixed mortgage rates before applying

The rate of interest charged to finance a home purchase, also called the mortgage rate, has a huge impact on the total cost of your loan.

Getting the lowest rate possible can significantly lower the overall cost of your mortgage. Here’s an example that illustrates just how much you can save by shaving 0.3% off of a three-year fixed mortgage rate. For the home purchase, we’ll use the following figures:

If your rate was 5.5%, you would pay $265,975 in total interest over the course of your mortgage. If your rate was 5.2%, you’d pay $249,320 — a difference of $16,655.

Use APR for accurate 3-year fixed mortgage rate comparisons

When comparing mortgage rates, compare annual percentage rates (APRs) — not just the advertised interest rates. The interest rate is the set percentage a lender charges you to borrow money. 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.

Frequently asked questions about three-year fixed mortgage rates

What’s a good three-year fixed mortgage rate?

As of April 10, 2024, some lenders were offering three-year fixed-rate mortgages slightly below 5%. The rate you’re offered will be based on your credit score, down payment amount and home purchase price.

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