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Fixed mortgage rates from Canada’s Big 6 banks
Rates updated: September 30, 2024
Bank |
5-Yr Fixed Rate |
3-Yr Fixed Rate |
1-Yr Fixed Rate |
|---|---|---|---|
| 6.49% | 6.54% | 7.34% | |
| 6.84% | 6.99% | 7.04% | |
| 6.44% | 6.54% | 7.24% | |
| 6.39% | 6.50% | 7.24% | |
| 6.49% | 6.54% | 7.29% | |
| 6.79% | 6.94% | 7.74% |
Posted rates for closed mortgages with amortization under 25 years. Data source: Canada's major banks
Fixed mortgage rate news: September 2024
The big news from mortgage rate land is that the Bank of Canada lowered its overnight rate for the third consecutive time on September 4. Unfortunately, the overnight rate only affects variable mortgage rates.
That’s alright, though, because fixed rates have been slowly trending down for the past several weeks, and are at their lowest point in over a year. As of September 4, 2024, some brokers were offering three-year fixed rates for below 4.5% and five-year fixed rates for less than 4.25%.
Based on current activity in the government bond market, fixed rates aren’t likely to swing too hard one way or the other in the near future. But lenders are in a competitive/desperate mood these days, so you might be surprised by the fixed rate you’re offered.
Fixed mortgage rates: 12-month history
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. 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 | 6.45% |
Based on average weekly conventional mortgage interest rates posted by the major chartered banks. Data source: Bank of Canada
Other calculators to inform your next mortgage decision
Factors that affect Canadian 5-year fixed mortgage rates
Two factors determine the five-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 five-year government bonds go up or down, five-year fixed mortgage rates eventually follow suit. The same goes for two- and three-year bonds and fixed mortgage rates that correlate with those terms.
Your financial situation
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.
Other debts. If you’re carrying a heavy debt load, lenders may question your ability to pay them back. This doubt may result in them offering you a higher interest rate.
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.
How to choose the best 5-year fixed mortgage rate
Interest rates are just one factor to consider when choosing a mortgage. Make sure you think about these factors, too.
Amortization length
Amortization is the time needed to pay off your mortgage in full. Some borrowers opt for shorter amortization periods (25 years is the most common) because it means paying less interest overall. Longer periods mean smaller monthly payments, but you’ll pay more in total interest over time.
Fees
Fees 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.
Open vs. closed mortgages
Lenders may charge prepayment penalties if you pay off a large portion of your closed mortgage before the end of its term. An open mortgage may make sense if you might sell your home before the term expires or if you plan to pay your mortgage down ahead of schedule — but you’ll likely pay a higher rate.
Portability
Porting a mortgage occurs when a homeowner transfers 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.
Term length
Both shorter and longer term fixed-rate options are available. Work with a mortgage professional, such as a mortgage broker, to match your needs with the best term. A desire to lock in a monthly payment for a longer time may lead you to look beyond five years. Or, you may value the flexibility of a shorter term.
Fixed mortgage rates vs. variable mortgage rates
Fixed mortgage | Variable mortgage | |
| Interest rates at time of closing | Historically more expensive than variable rates. In recent years, however, the opposite has been true. | Historically less expensive than variable rates. In recent years, however, the opposite has been true. |
| Effects of breaking mortgage or refinancing | Higher penalties. | Lower penalties. |
| Exposure to rate fluctuations | None. Your rate won’t change if market rates change. | If market rates drop, your interest rate drops. If rates rise, your rate goes up. |
Putting it all together
It may seem counterintuitive, but the “best” mortgage isn’t necessarily the one that offers the lowest annual percentage rate — though that’s a good place to start.
Discussions on websites like Reddit are good examples of why weighing all the factors in a mortgage is important. In one thread, a user cited the stress of renewing a mortgage as a reason to choose a five-year fixed term instead of a shorter mortgage. Another suggested the best option today was to get a 5-year variable rate — hoping for rate cuts in the near term with plans to convert to a fixed rate before the term is up. You’ll want to weigh these and other factors to choose the best option for you.
Reddit is an anonymous forum, so we cannot confirm individual experiences or circumstances.
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 5-year mortgage rate posted by Canada’s major chartered banks was:
- 6.49% on October 19, 2022.
- 5.24% on October 17, 2012.
- 6.7% on October 16, 2002.
- 9.25% on October 21, 1992.
- 16% on October 20, 1982
Compared to the past decade, mortgage rates seem high. Compared to rates Canadians have paid in the past, rates look average.
Forecasting 5-year fixed mortgage rates
Canada’s five-year fixed mortgage rates are hard to predict with any accuracy, especially over the long-term.
History tells us that five-year fixed mortgage rates tend to move in the same direction as five-year government bond yields. But it’s hard to pinpoint when they’ll move, how much they’ll fluctuate, and how long they’ll stay at their new levels.
How to qualify for the lowest 5-year fixed mortgage rate
Lenders have different mortgage qualification criteria, but there are other reliable ways to qualify for the best mortgage rate.
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, 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 radio 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.
- 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 5-year fixed mortgage rates
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. Here’s an example:
- Lender A: Offers a 5-year fixed mortgage with a 3% interest rate and 3.25% APR.
- Lender B: Offers a 5-year fixed mortgage with a 3% interest rate and 3.175% APR.
If you only compared the above mortgage offers based on interest rate, you’d find no difference. But by examining APR, you can see that Lender B is charging lower fees, meaning the second mortgage offer is the better deal.
Frequently asked questions about 5-year fixed mortgage rates in Canada
Fixed mortgage rates are expected to decline somewhat in 2024, so locking in for five years could mean paying more interest than necessary for at least part of your mortgage term. That’s not the worst scenario imaginable, especially when one- and three-year fixed rates are more expensive and harder to qualify for.
Some Canadian lenders were offering five-year fixed mortgage rates for around 4.25% as of September 2024.
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