Best Mortgage Refinance Rates in Canada
Comparing mortgage refinance rates among lenders can help you save money and secure better terms for the next phase of your mortgage.Mortgage refinance rate update: July 2025
July has brought a new sense of uncertainty to Canadian mortgage refinance rates.
In the last half of June, falling government bond yields allowed lenders and brokerages to lower their fixed renewal rate offers. But July has seen those bond yields start creeping up again. If yields keep increasing over a sustained period of time, fixed rates are likely to edge up, too.
As of July 8, 2025, three- and five-year fixed renewal mortgage rates can still be found for around 4.3% at some brokerages, but they’re generally 4.4% or higher. If you’re worried about rates rising before you secure a mortgage this summer, consider getting pre-approved and locking in a rate sooner rather than later.
Variable mortgage rates have been stable since the Bank of Canada decided to hold its overnight rate at 2.75% on June 4. The country's lowest variable mortgage rates will stay around 4.5% until at least July 30, when the BoC is scheduled to make its next overnight rate announcement.
A rate cut in July will depend on both inflation and the state of Canada's tariff-rattled economy, so it'll be a challenging call for the Bank to make. Analysts expect the BoC to cut its overnight rate another two times this year, which could shave at least 0.5% off of current variable rates.
A July rate cut would make variable rates the most affordable option for homeowners refinancing their mortgages, and the easiest one to qualify for. It's been over two years since that was the case.
Best mortgage rates in Canada
Compare offers from Canada’s top mortgage lenders and brokers.
Why are mortgage refinance rates higher?
There are various theories around why mortgage refinance rates are typically higher than purchase mortgage rates.
One is that lenders assume greater risk when they extend homeowners more credit over a longer period of time. If you refinance your mortgage, borrow against your home equity and opt for a longer amortization period, for example, it adds extra time during which you might fail to make good on your mortgage payments.
Another possible explanation is that refinances can result in lower profits for lenders. Let’s say you agree to a five-year fixed rate mortgage at 5% but are able to refinance at 3% after two years. The result is three years of savings for you, but three years of reduced earnings for your lender. Charging a higher rate on your refinance mitigates these losses. (Hefty prepayment penalties help, too.)
How to get the best mortgage refinance rate
Refinancing a mortgage requires applying for a new home loan. To be approved, the lender will put your finances under the microscope again. Before offering you the best refinance rate, your lender will want to see:
Debt service ratios well below the limits laid out by the Canada Mortgage and Housing Corporation and other mortgage insurance providers. These limits include a gross debt service ratio of 39% and a total debt service ratio of 44%
The highest credit score you can manage. A score of 700 or higher, for example, will demonstrate creditworthiness to lenders.
On-time mortgage payments since becoming a homeowner. Missed mortgage payments are the reddest of flags.
Your current lender may not approve a refinance if your credit score has decreased or you’re experiencing debt issues. That doesn’t mean you’re out of options. There are plenty of B lenders that specialize in bad credit mortgages where you may be able to get refinanced.
Other mortgage refinance costs to consider
With all things mortgage-related, there’s more to think about than just the interest rate you’re offered. That’s especially true when it comes to refinancing, where other costs can include:
Prepayment penalties. Refinancing before the end of your mortgage term means breaking your mortgage contract, paying off your loan in full ahead of time and paying what can be a hefty penalty. How much you pay will depend on your interest rate type and how your lender calculates your penalty amount.
A home appraisal. Your lender will use a professional appraisal to determine your home’s value before deciding how much you can borrow against it.
Legal fees. As with your original mortgage, a real estate lawyer will be required to facilitate the transaction.
Mortgage discharge fees. You may have to pay to discharge your mortgage if you refinance with a new lender.
An opportunity to lock in at a lower rate will always sound enticing, but the benefits have to be weighed against the total cost to ensure you’re making the right long-term decision for your household.
Frequently asked questions
What are current interest rates for refinancing?
What are current interest rates for refinancing?
As of July 2025, some mortgage brokerages are offering both fixed and variable refinance rates for around 4.5%.
Should I refinance to save 1% on my mortgage rate?
Should I refinance to save 1% on my mortgage rate?
Shaving 1% off of your mortgage rate will reduce the interest you pay over the rest of your term. Whether you save money overall will depend on how much your prepayment penalties, legal fees and home appraisal cost you.
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Clay Jarvis
Clay Jarvis
Clay Jarvis