Best Mortgage Refinance Rates in Canada
Editor’s Note: The Bank of Canada has lowered its overnight rate to 2.25%, a decrease of 0.25 percentage points. Most lenders will advertise new, lower variable mortgage rates on Thursday, Oct. 30. In its announcement, the BoC stated “If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2%.” Read more about the cut and how it could affect home buyers.
Mortgage refinance rate update: October 2025
Refinance Rates
If you held off on refinancing your mortgage in October, congratulations. You might have saved some money by waiting.
On October 29, in response to sluggish economic growth, the Bank of Canada lowered its overnight lending rate for the fourth time this year. Shortly after the 25-basis point cut was announced, Canadian lenders lowered their variable mortgage rates.
The Bank accompanied its rate cut with a statement that said rates are “at about the right level” to usher Canada through this period of financial uncertainty, so variables might be as low as they’re going to get in 2025.
As of October 30, some mortgage brokerages and Big Six banks are offering variable refinance rates for around 4%. That’s not ideal, but it’s still a decent option if you’re refinancing to pay off higher interest debt.
Fixed refinance rates dipped toward the end of October, but it’s unlikely they’ll keep decreasing. Government bond yields, which lenders use to determine their fixed rate offers, shot up after the Bank of Canada’s latest rate decision. If bond yields continue rising, lenders may be forced to increase their fixed refinance rates.
As of October 30, three-year fixed and five-year fixed refinance rates are generally 4.1% or higher.
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 October 2025, some mortgage brokerages are offering variable refinance rates for around 4% and fixed refinance rates for around 4.1%.
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