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.        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.
       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.

3-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.
2.79% The Mortgage Emporium
The Mortgage Emporium		 60 days Lump Sum: 15%
Monthly: 15% 		$-
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2.79% Scotiabank
Scotiabank		 90 days Lump Sum: 15%
Monthly: 15% 		$-
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2.79% Family Lending
Family Lending		 60 days Lump Sum: 15%
Monthly: 15% 		$-
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2.84% Safebridge
Safebridge		 60 days Lump Sum: 15%
Monthly: 15% 		$-
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2.84% Xpert Mortgage Services
Xpert Mortgage Services		 120 days Lump Sum: 20%
Monthly: 20% 		$-
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2.99% Dominion Lending Centres
Dominion Lending Centres		 120 days Lump Sum: 20%
Monthly: 20% 		$-
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3.14% PC Financial
PC Financial		 120 days Lump Sum: 20%
Monthly: 25% 		$-
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3.18% CIBC
CIBC		 90 days Lump Sum: 10%
Monthly: 15% 		$-
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3.19% ING Direct
ING Direct		 120 days Lump Sum: 25%
Monthly: 25% 		$-
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3.39% FirstLine Mortgages
FirstLine Mortgages		 75 days Lump Sum: 20%
Monthly: 20% 		$-
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3.95% National Bank
National Bank		 90 days Lump Sum: 10%
Monthly: 100% 		$-
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3.95% TD Bank
TD Bank		 30 days Lump Sum: 15%
Monthly: 100% 		$-
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3.95% RBC Royal Bank
RBC Royal Bank		 90 days Lump Sum: 10%
Monthly: 100% 		$-
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4.05% Laurentian
Laurentian		 90 days Lump Sum: 15%
Monthly: 15% 		$-
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4.05% Bank of Montreal
Bank of Montreal		 90 days Lump Sum: 20%
Monthly: 20% 		$-
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4.35% MCAP
MCAP		 30 days Lump Sum: 20%
Monthly: 20% 		$-
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3-Year Fixed Rates in Ontario

-          Fixed mortgage rates in Ontario can be narrowed further into 3-year fixed mortgage rates.

-          The driving force behind 3-year fixed mortgage rates is 3-year government bond yields.

-          Although 3-year terms are not the most popular choice for Canadians, they present a good compromise in terms of locking in a fixed rate for a shorter period of time, thus providing you with the option to change mortgage type after 3 years.

-          Fixed rates are a popular choice in Ontario. Fixed mortgage rates are the mortgage product of choice for 66% of Canadians.

-          20% of Canadians have mortgage terms between 2-4 years

Defining Ontario 3-year fixed rates

The number ‘three’ in 3-year fixed mortgage rate refers to the term of the mortgage. Do not confuse this period of time with the amortization period. A term is the length of time that you secure your current mortgage rate with a specific lender. Once the time period has elapsed, you can then renew your mortgage at an available rate, with a lender of your choice.

A “fixed” mortgage rate signifies that the mortgage rate is set for the whole term. The mortgage rate you lock in, for example 3.9%, will apply to your mortgage throughout the term. Your monthly payments and interest paid will be calculated based on this rate.

Even if you procure a 3-year fixed mortgage rate, you must meet the requirements of a 5-year fixed mortgage rate. This standard ensures that there is leeway for the borrower and also reduces the risk to the lender.  

A closer look at 3-year fixed rates in Ontario

With 3-year fixed rates in Ontario, you can lock in the rate and not worry about it fluctuating. This mortgage type is preferred by people who do not have a high risk tolerance. It allows for easy budgeting as your monthly mortgage payments stay the same.

Although not as popular as a 5-year fixed rate, there are a few reasons why 3-year fixed mortgage rates make sense.

If you consider yourself to be in a falling interest rate environment, where rates will stay constant and possibly fall, a shorter term is more strategic. You can then take advantage of the low rates at the end of the term when your mortgage is up for renewal. The opposite is true if you believe you are in a rising interest rate environment.

Another important point to consider is how likely you are to break your mortgage within a few years. An example of such a scenario is if you wanted to upgrade your house. Choosing a 3-year term as opposed to a 5-year term could save you a substantial amount in penalty costs.

Also, if there is a significant premium on a 5-year rate compared to a 3-year rate due to the additional interest rate certainty, it may not be worth purchasing.

Keep in mind that with an Ontario 3-year fixed mortgage rate, you may be paying higher interest rates if variable mortgage rates drop.

What determines Ontario 3-year fixed mortgage rates?

Bond yields are influenced by economic conditions such as inflation and unemployment. The spread between bond yields and posted mortgage rates are set by mortgage lenders based on the competition, market conditions and their marketing strategy.

Current Ontario Mortgage Rates