In Canada, buying a house is one of the most expensive things you’ll ever do, and your mortgage rate determines your budget. Canada currently has two mortgage rates. For 5 years, the fixed rate is 4.69% and the variable rate is 4.42%. Big lenders like RBC offer fixed RBC mortgage rates near 4.59% and variable rates near 3.95%.
These numbers demonstrate how much mortgage rates vary by lender or product. A small rate change can affect your monthly and total payments. This is why proper Canadian mortgage rate comparison is crucial.
This guide covers everything about Canadian mortgage rates, from fixed and variable rates to using calculators to calculate payments and find the best rates.
Key Insights
- Mortgage rates in Canada vary daily, so comparing offers before locking in is essential.
- Even a 0.5% difference in interest rate can save or cost you thousands over your mortgage term.
- Fixed rates offer peace of mind with stable payments, while variable rates can lead to savings when market rates fall.
- Your credit score, down payment, and loan type significantly influence the rate you qualify for.
- Before signing, check penalties, prepayment options, and term flexibility beyond the rate.
- Using a mortgage calculator helps you see the real impact of different rates on your monthly budget.
- Regularly reviewing and renewing at competitive rates ensures you’re never overpaying on your mortgage.
What is a Mortgage Rate?
If you are wondering what is a mortgage rate, then remember that a mortgage rate is the interest you pay on your home loan. It heavily affects your monthly payment and mortgage cost over time. Even a small rate change can affect your payment.
Mortgage rates in Canada depend on the Bank of Canada’s key interest rate, your credit score, down payment size, and mortgage type. Current 5-year fixed mortgage rates are around 4.69% and variable rates are around 4.42%.
Major banks and credit unions adjust their rates based on market and economic conditions. So check Canadian mortgage rates before applying and compare offers from multiple lenders.
Key Factors that Affect Mortgage Rates
Mortgage rates in Canada don’t stay the same. They go up and down depending on you and the economy as a whole. If you know why these rates change, you can make better plans and decide when to lock in a good rate.
1. Bank of Canada’s Policy Rate
The Bank of Canada sets the overnight lending rate, which affects bank borrowing costs. Lenders raise mortgage rates when the Bank of Canada increases them to control inflation. Often, mortgage rates fall with it.
2. Bond Yields and Market Conditions
Fixed mortgage rates closely track government bond yields. Fixed mortgage rates rise when bond yields rise due to market expectations or global events. Fixed rates fall with yields.
3. Borrower’s Credit Score
Credit scores indicate borrower reliability. A higher score usually means a lower interest rate, while a lower score can mean higher rates or stricter loan terms.
4. Down Payment and Loan Type
Your home’s down payment affects your rate. Mortgages with 20% or more down are less risky and have better rates. Mortgage insurance for smaller down payments may increase your cost.
5. Fixed vs. Variable Rate Choice
Fixed mortgage rates are fixed for the term, while variable rates vary with the lender’s prime rate. Fixed rates are stable, while variable rates may be lower but rise with interest rates.
6. Loan Term and Amortization Period
Loans with shorter terms (1–3 years) usually have lower rates than those with longer terms (5–10 years). Lenders take less risk for shorter terms. Amortization period, or loan repayment time, also affects interest paid.
7. Type and Location of Property
Based on property type (condo, detached, rental) and location, lenders may offer different rates. Stable or urban homes get better rates than those in smaller, less predictable markets.
Fixed vs Variable Mortgage Rates Canada
The table below highlights the key differences to help you decide which option best fits your financial goals.
| Feature | Fixed Mortgage Rate | Variable Mortgage Rate |
| Definition | The interest rate stays the same for the entire mortgage term (e.g., 3, 5, or 10 years). | The interest rate fluctuates based on the lender’s prime rate, which follows the Bank of Canada’s rate changes. |
| Payment Stability | Monthly payments remain consistent throughout the term. | Payments can increase or decrease depending on market rates. |
| Predictability | Highly predictable. It is ideal for budgeting and long-term planning. | Less predictable so payments may vary over time. |
| Initial Interest Rate | Usually slightly higher than variable rates. | Typically lower at the start, but can rise later. |
| Risk Level | Low risk — protected from rate hikes. | Higher risk — affected by economic changes and interest rate increases. |
| Benefit if Rates Drop | No benefit — you stay locked into your agreed rate. | You benefit directly from rate reductions. |
| Penalty for Breaking Mortgage | Often higher penalties, especially for early termination. | Usually lower penalties compared to fixed-rate loans. |
| Best For | Borrowers who value stability and don’t want surprises in monthly payments. | Borrowers comfortable with some risk who want to take advantage of potential rate drops. |
| Example Term | Commonly 5-year fixed mortgages in Canada. | Commonly 5-year variable mortgages tied to prime rate. |
Step-by-Step Guide to Comparing Canadian Mortgage Rates
Here’s a simple step-by-step guide to help you compare Canadian mortgage rates effectively and choose the one that best fits your needs.
Step 1: Know What You Need
Start by understanding your financial situation and goals.
- How much do you plan to borrow?
- What’s your down payment amount?
- How long do you plan to stay in the property?
- Do you prefer predictable payments or flexibility?
Knowing your priorities will help you decide whether to choose a fixed or variable rate, and what term (like a 3-year or 5-year mortgage) fits best.
Step 2: Check Current Mortgage Rates
Before comparing, get an idea of where rates stand today.
- Look up current Canadian mortgage rates from banks, credit unions, and online lenders.
- Many comparison sites update rates daily and show differences for 5-year fixed and variable terms.
- Keep in mind that posted rates are just the beginning. Many lenders will lower their rates if you negotiate or apply through a broker such as Mortgage broker Surrey BC.
Step 3: Compare Apples to Apples
When comparing, make sure you’re looking at similar loan terms and conditions.
- Compare the same term length (e.g., 5-year fixed vs 5-year fixed).
- Note if the rate is for an insured or uninsured mortgage — insured mortgages often have slightly lower rates.
- Check if the rate is open or closed, since open mortgages allow early repayment with fewer penalties.
Step 4: Use a Mortgage Calculator
Once you have a few options, use an online mortgage payment calculator to see how different rates affect your monthly payment.
- Enter the loan amount, rate, and amortization period.
- This helps you understand how much you’ll pay in total and how small rate changes can impact your budget.
Example: On a $500,000 mortgage, a 0.5% rate difference can mean over $10,000 in extra interest over five years.
Step 5: Look Beyond the Rate
A lower rate doesn’t always mean a better deal.
Pay attention to:
- Prepayment privileges (how much extra you can pay yearly without penalties).
- Penalties for breaking the mortgage early.
- Portability (whether you can transfer your mortgage if you move).
- Rate hold period (how long the lender will lock your rate).
These small details can save you money and provide flexibility later.
Step 6: Compare Lender Options
Different lenders have different strengths:
- Banks: Reliable but may have stricter approval rules.
- Credit unions: Often more flexible and community-focused.
- Online lenders and brokers: Can offer competitive rates and faster approvals.
It’s worth getting quotes from more than one source before making a decision.
Step 7: Negotiate and Get Pre-Approved
Once you find a good offer, don’t hesitate to negotiate.
- Ask if they can match or beat another lender’s rate.
- Getting pre-approved secures your rate for a set period (usually 90–120 days), protecting you if rates rise before you buy.
Step 8: Review and Decide Confidently
Please carefully review your final offers before signing. Check the total cost, not just the interest rate, and understand all terms, penalties, and payment options.
If you are in search of professional help for a mortgage, get in touch with QuickMortgagesBC.
Frequently Asked Questions
1. What are the current Canadian mortgage rates?
As of now, the average 5-year fixed rate is around 4.69%, and the 5-year variable rate is about 4.42%.
2. What factors affect mortgage rates in Canada?
Bond yields, your credit profile, and the Bank of Canada’s policy rate all influence mortgage rates.
3. Should I choose a fixed or variable mortgage rate in Canada?
Choose fixed for stability and predictable payments, or variable for flexibility and potential savings if rates drop.
4. How often do mortgage rates change in Canada?
Rates can change weekly or even daily, depending on market trends and Bank of Canada updates.
