3-Year Fixed Mortgage Rates

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Mortgage Amount If you are buying a home, the mortgage amount is the home price, minus your down payment, plus CMHC insurance if your down payment is less than 20%. If you are renewing or refinancing your mortgage, your mortgage balance is the value of your the mortgage.
Type Please tell us which type of mortgage rate you want. A fixed mortgage rate is one that stays the same throughout the duration of your mortgage term. A variable mortgage rate is attached to Prime, which means it will fluctuate if Prime goes up or down. An open mortgage is one that can be prepaid anytime without penalty, but comes with higher rates. And a cash back mortgage gives you the option to borrow some extra cash when you buy your home. Term The mortgage term is the amount of time a home buyer commits to the rules, conditions and interest rate agreed upon with the lender. The term can be anywhere from six months to 10 years, with a 5-year mortgage term being the most common duration. Location Please ensure your location is correct in order to find the best rates available in your area.
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  years
Type Please tell us which type of mortgage rate you want. A fixed mortgage rate is one that stays the same throughout the duration of your mortgage term. A variable mortgage rate is attached to Prime, which means it will fluctuate if Prime goes up or down. An open mortgage is one that can be prepaid anytime without penalty, but comes with higher rates. And a cash back mortgage gives you the option to borrow some extra cash when you buy your home. Term The mortgage term is the amount of time a home buyer commits to the rules, conditions and interest rate agreed upon with the lender. The term can be anywhere from six months to 10 years, with a 5-year mortgage term being the most common duration. Location Please ensure your location is correct in order to find the best rates available in your area.

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Type Please tell us which type of mortgage rate you want. A fixed mortgage rate is one that stays the same throughout the duration of your mortgage term. A variable mortgage rate is attached to Prime, which means it will fluctuate if Prime goes up or down. An open mortgage is one that can be prepaid anytime without penalty, but comes with higher rates. And a cash back mortgage gives you the option to borrow some extra cash when you buy your home. Term The mortgage term is the amount of time a home buyer commits to the rules, conditions and interest rate agreed upon with the lender. The term can be anywhere from six months to 10 years, with a 5-year mortgage term being the most common duration. Location Please ensure your location is correct in order to find the best rates available in your area.
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  years

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Location Please ensure your location is correct in order to find the best rates available in your area.
Rate Provider Hold until Prepayment options Payment
2.08% CanWise Financial
Lic. 12530
Dec 27
No pre-approval
20 % Lump Sum 20 % Regular $ Get this rate
2.09% MortgagePal.ca
Dec 27
No pre-approval
20 % Lump Sum 20 % Regular $ Get this rate
2.24% MCAP Dec 27 20 % Lump Sum 20 % Regular $ Get this rate
2.29% Marc Crossman Dominion Lending Centres
Oct 13
No pre-approval
20 % Lump Sum 20 % Regular $ Get this rate
2.39% First National Dec 27 15 % Lump Sum 15 % Regular $ Get this rate
2.44% RBC Royal Bank Dec 27 10 % Lump Sum 100 % Regular $ Get this rate
2.44% CIBC Nov 27 10 % Lump Sum 100 % Regular $ Get this rate
3.34% PC Financial Dec 27 20 % Lump Sum 25 % Regular $ Get this rate
3.39% Laurentian Nov 27 15 % Lump Sum 15 % Regular $ Get this rate
3.39% TD Bank Dec 27
No pre-approval
15 % Lump Sum 100 % Regular $ Get this rate
3.39% HSBC Nov 27
No pre-approval
20 % Lump Sum 20 % Regular $ Get this rate
3.39% National Bank Nov 27 10 % Lump Sum 100 % Regular $ Get this rate
3.39% Scotiabank Oct 28 15 % Lump Sum 15 % Regular $ Get this rate
3.49% Tangerine Sep 28 25 % Lump Sum 25 % Regular $ Get this rate
3.59% Bank of Montreal Nov 27 20 % Lump Sum 20 % Regular $ Get this rate
No pre-approval
Lump Sum N/A Regular N/A Get this rate

3-year Fixed Mortgage Rates

Historical 3-Year Fixed Mortgage Rates From 2000 - Today


3-year fixed mortgage rates defined

A 3-year fixed mortgage will have a constant rate of interest over a term of three years. The term should not be confused with the amortization period, which is the length of time it takes to pay off your mortgage. The term, rather, is the period you are committed to the contractual provisions and mortgage rate with your lender.

Three-year terms are not the most popular in Canada, but they do make sense under certain circumstances, which are discussed in more detail below.


Comparing 3-year fixed mortgage rates

There are a number of factors supporting the choice of a short-term rate like the 3-year fixed mortgage rate. For one, if you believe you are in a falling interest rate environment, where rates will, in the least, stay stagnant and, at best, fall, shorter terms are more strategic. Instead of being locked in to a rate for years longer, you can take advantage of low rates when your mortgage is up for renewal. Conversely, if you are in a rising interest rate environment, the opposite is true.

Short terms are also sensible if you are likely to break your mortgage within a few years – like, for example, if you want to upgrade your home. Going with a 3-year term over a 5-year term could save you a considerable amount of money in penalty costs.

3-Year Fixed vs. Longer Term Mortgage Rates From 2006 - Today

Additionally, you will want to consider the market pricing of different terms and the premiums associated with locking in long-term mortgage rates. For instance, if there is a significant premium on a 5-year rate compared to a 3-year rate, it may not be worth buying the two years additional interest rate certainty.

The advantage of a fixed mortgage rate is that your monthly mortgage payments will stay constant and you are protected against interest rate fluctuations; however, variable rates, although exposed to changes in the prime lending rate, have proven to be less expensive when examined historically.


Popularity of 3-year fixed mortgage rates

Around 20% of Canadians have a mortgage term between two and four years, with this figure slightly higher for younger age groups. Typical to younger demographics, the tolerance for risk is likely higher, with a reduced urgency to lock in rates for long periods of time.

Fixed rates, however, at 66% of all mortgages, are most popular, with little difference in uptake amongst age groups.

20% of Canadians have a term between 2-4 years1
TERM Length Age Group
18-34 35-54 55+ All Ages
1 YR 5% 7% 6% 6%
2-4 YR 27% 18% 12% 20%
5 YR 66% 65% 69% 66%
6-10 YR 3% 9% 10% 7%
>10 YR 0% 0% 2% 1%

What drives changes in 3-year fixed mortgage rates?

Fixed mortgage rates follow government bond yields, with 3-year fixed rates following 3-year government bond yields. Bond yields are driven by economic conditions, and the spread between bond yields and lender-posted mortgage rates vary by a lender's marketing strategy and general credit market conditions.


References and Notes

  1. Annual state of the Residential Mortgage Market in Canada, CAAMP, 2010

Current Mortgage Rates