Connecting you to Canada's best mortgage rates

1-Year Fixed Mortgage Rates

Mortgage Rate Mortgage rate The rate of interest you will pay on the outstanding balance of your mortgage. This rate can be fixed for the duration of the term or variable, fluctuating with the prime rate. Fixed rates are most popular in Canada and represent 66% of all mortgages.	Provider Provider Mortgage providers include lenders and mortgage brokers. As the name suggests, lenders provide the funding for your mortgage. Mortgage brokers are licensed professionals with access to multiple lenders and products. According to the Canadian Mortgage and Housing Corporation, mortgage brokers accounted for 38% of mortgage originations in 2009.	Rate Hold Rate hold The rate hold is the time period, between 30-120 days, before your mortgage renewal date you are able to lock in the current mortgage rate. If rates go down further within this period, however, many lenders will honour the lower rate.	Pre-Payment Prepayment Prepayment options outline the flexibility you have to increase your monthly mortgage payments or make a lump sum outlay against your mortgage as a whole. According to the Canadian Association of Accredited Mortgage Professionals (CAAMP), 28% of mortgage holders used one or both prepayment privileges in 2010.	Payment Payment The monthly mortgage payment is calculated based on the mortgage amount, amortization period and the associated mortgage rate. A general affordability rule is that your monthly housing costs should not exceed 32% of your gross household monthly income.
2.74%	True North Mortgage	30 days	Lump Sum: 10% Monthly: 100%	$- Get Details
2.74%	Marc Crossman	120 days	Lump Sum: 15% Monthly: 15%	$- Get Details
3.09%	ING Direct	120 days	Lump Sum: 25% Monthly: 25%	$- Get Details
3.20%	TD Bank	30 days	Lump Sum: 15% Monthly: 100%	$- Get Details
3.20%	Bank of Montreal	90 days	Lump Sum: 20% Monthly: 20%	$- Get Details
3.20%	RBC Royal Bank	90 days	Lump Sum: 10% Monthly: 100%	$- Get Details
3.50%	National Bank	90 days	Lump Sum: 10% Monthly: 100%	$- Get Details
3.50%	CIBC	90 days	Lump Sum: 10% Monthly: 15%	$- Get Details
3.50%	Laurentian	90 days	Lump Sum: 15% Monthly: 15%	$- Get Details
3.60%	MCAP	30 days	Lump Sum: 20% Monthly: 20%	$- Get Details
3.65%	Scotiabank	90 days	Lump Sum: 15% Monthly: 15%	$- Get Details

1-year Fixed Mortgage Rates

Historical 1-Year Fixed Mortgage Rates Source: Mortgage Brokers

Mortgage rate is fixed over a 1-year term
6% of Canadians have mortgage terms of one year
66% of Canadians have fixed mortgage rates
1-year fixed mortgage rates follow 1-year government bond yields

1-year fixed mortgage rates defined

The mortgage term, in this case one year, is the length of time your mortgage rate is in effect. If you select a 1-year fixed rate, you will be able to select a new mortgage type, provider and associated mortgage rate at no penalty come the end of the year.

The mortgage term you choose depends on your expectations of future interest rates. For example, if you think mortgage rates will go up, you may want a longer 5-year term to lock in the current low rate. However, if you feel interest rates will fall, or you want to renegotiate your mortgage in a year's time, you would consider a 1-year mortgage rate.

Comparing 1-year fixed mortgage rates

Most consumers are uncertain which direction mortgage rates will take in the near future. Further, many are unsure if variable or fixed mortgage rates will better serve their financial situation; so, you can select a 1-year fixed rate and observe the market.

Since 1-year fixed mortgage rates are almost always lower than 5-year fixed rates, in falling or flat interest rate environments, some consumers continually lock in to a 1-year fixed mortgage rate year after year. However, a similar strategy can be achieved through variable mortgage rates, which are usually lower than 1-year fixed mortgage rates and can always be converted to a fixed mortgage rate at no charge.

1 Year Fixed vs. Longer Term Mortgage Rates Source: Surveyed Mortgage Brokers

Some home owners opt for a 1-year fixed mortgage rate because they plan to move in a year. The problem with this strategy is that unless the home owner is moving in exactly one year, they will incur a penalty for breaking their mortgage early. Thus, a variable mortgage rate often makes sense in this case as the interest rate is often lower, and the refinance penalty, three months interest, will be lower than refinancing a fixed mortgage.

Popularity of the 1-year fixed mortgage rate

6% of Canadians have a 1-year term

Term Length	Age group
Term Length	18-34	35-54	55+	All ages
1 year term	5%	7%	6%	6%
2-4 year term	27%	18%	12%	20%
5 year term	66%	65%	69%	66%
6-10 year term	3%	9%	10%	7%
>10 year term	0	0	2%	1%

Source: CAAMP "Annual state of the Residential Mortgage Market in Canada" 2010

Though fixed rate mortgages are very common, representing 66% of all mortgages, the 1-year mortgage term is one of the least popular terms, representing only 6% of the Canadian market. The popularity of 1-year mortgage rates in Canada does not vary dramatically by age.

What drives changes in 1-year fixed mortgage rates?

Fixed mortgage rates follow government bond yields, with 1-year fixed rates following 1-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.

Source: All data percentages were taken from CAAMP "Annual State of the Residential Mortgage Market in Canada" 2010

Mortgage Amount: Mortgage Amount If you are a first-time homebuyer, the mortgage amount is the price of the home you intend to purchase, minus your down payment. If you are renewing or refinancing your mortgage, this is the value of your the mortgage.	Type:		Term: 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.
	Province:		Amortization: Amortization The amortization period is the length of time it takes to pay off your mortgage in its entirety. The most common amortization period is 25 years, with the maximum set at 30 years for down payments less than 20%. Although longer amortization periods reduce your monthly payments, you will pay more interest over the life of your mortgage.