Editor’s Note: The Bank of Canada has lowered its overnight rate to 2.5%, a decrease of 0.25 percentage points. This was the first rate cut in six months. In its announcement, the BoC stated, “After remaining resilient to sharply higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing.” Read more about the cut and how it could affect home buyers.
3-Year Fixed Mortgage Rates in Canada
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Current 3-year fixed mortgage rates in Canada
3-year fixed mortgage rates available from a broker
3-year fixed mortgage rates at Canada's Big 6 banks
Posted rate | Discounted rate | |
|---|---|---|
6.08% | 4.57% | |
6.64% | 4.41% | |
6.10% | 4.48% | |
6.09% | 4.58% | |
6.05% | -- | |
6.05% | 4.674% |
All discounted rates are annual percentage rates (APR), which include additional fees.
What's happening with 3-year fixed mortgage rates: September 2025
Three-year fixed mortgage rates have been fairly stable in September, but we could see some better offers in the coming weeks.
Three-year government bond yields, which lenders use to set their three-year fixed rates, have been sliding steadily all month. Some major banks have already chipped away at their three-year fixed-rate offers, and more lenders could follow suit.
As of September 15, you can find mortgage brokers offering three-year fixed mortgage rates below 3.7%, but most brokerage rates are closer to 3.9%. Canada’s biggest banks are offering three-year fixed rates closer to 4.3%.
3-year fixed mortgage rates: A detailed breakdown
How to tell if a 3-year fixed is the way to go
Most Canadian homeowners break their mortgage mid-term. With fixed-rate mortgages, breaking and pre-paying can result in painful penalties.
A three-year fixed-rate mortgage hedges against that risk. Because the term is shorter, the potential for breaking should be less than if you go with a five-year fixed.
If you like the stability of a fixed rate but are unsure whether you'll stay in your home for five years, a three-year fixed might be a wise choice.
The sweet spot?
A three-year fixed can be an intriguing option. You get the stability of the ever-popular five-year fixed, but without having to commit for as long.
That shorter time horizon can be beneficial. You’ll renew your mortgage sooner, which could help you find a mortgage that better fits your financial situation. Three years into the future might be easier to plan for than five, too.
But a fixed rate of any length will still provide less flexibility than a variable-rate mortgage.
A variable rate can generally be swapped for a fixed rate during the mortgage term, which can be helpful if variable rates are rising at an unaffordable pace. The prepayment penalty triggered by a variable-rate mortgage is capped at three-months’ interest — much lower than what you’d pay if you had a fixed-rate.
3-year fixed vs. 5-year fixed | 3-year fixed vs. variable | |
|---|---|---|
Cost comparison | Historically, 3-year fixed rates have been the less expensive option, but not since the pandemic. | Variable rates have historically been lower than fixed rates. Variables have been the more volatile option since COVID. |
Prepayment penalty risk | About the same. The real risk with pre-payment penalties is the size of your mortgage, not the term you choose. | A 3-year fixed will generally be riskier. With variables, the maximum prepayment penalty tops out at three months’ interest |
Switchability | Neither can be switched to a variable rate mid-term. | A variable rate can be switched to a fixed rate for the remainder of the term without penalty. Fixed rates can't be switched. |
Exposure to rate fluctuations | Equal, since your rate doesn't increase with a fixed rate. You will have to renew sooner, though, which carries it's own set of risks. | Significantly higher with variable rates, which change every time your bank’s prime rate increases or decreases. |
Pros and cons of 3-year fixed-rate mortgages
Pros:
Predictability. You'll know what your mortgage payment will be for the entirety of the term.
Manageable time frame. Planning for three years is generally easier than planning for five.
Cons:
No ability to switch. You can't switch rate types if variable rates become attractive.
Pre-payment penalties. Breaking a fixed-rate mortgage of any length can trigger significant penalties.
How 3-year fixed mortgage rates are determined
The bond market
Here’s a simple way of thinking about it: when the yield on three-year government bonds rises or falls for a sustained period, three-year fixed mortgage rates eventually follow suit. You can track three-year bond yields by visiting the Bank of Canada website.
Your financial situation
The bond market influences three-year fixed rates, but the actual rate you’re offered depends on your financial situation, including your credit score, the size of your down payment and how much debt you're carrying.
A lender or brokerage might advertise a 3-year fixed rate for 4%, but that doesn’t mean everyone will qualify for it.
How to get a lower 3-year fixed mortgage rate
Improve your credit score 📈 Borrowers with a credit score of 680 or higher tend to get the best mortgage rates. Lower credit scores may mean working with an alternative lender that offers higher rates.
Tackle your debt 🏦 Paying off debt improves your credit score and increases cash flow. Debt payments, including your mortgage, should total less than 44% of your household income.
Boost your down payment 💰 Making a larger down payment and borrowing less reduces a lender's risk. They may reward you with a lower interest rate.
Compare multiple offers ⚖️ Don't limit yourself to one option when looking for a mortgage; get offers from a few lenders. A few minutes of your time could result in thousands in savings.
Negotiate 💪 Always ask lenders if they can improve on their rate offers. If this makes you feel uncomfortable, use a mortgage broker, who will negotiate for you.
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 Sept. 2025, you can find three-year fixed rate offers for around 3.9% at some mortgage brokerages.
Will three-year fixed mortgage rates go down in 2025?
Will three-year fixed mortgage rates go down in 2025?
Three-year fixed mortgage rates don't get the same forecast treatment that five-year fixed rates do, but both generally follow the same trend lines. Five-year fixed rates may drop slightly by the end of the year. If they do, three-year fixed rates likely will do the same.
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.
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Clay Jarvis
Clay Jarvis