5-Year Fixed Mortgage Rates

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. 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.
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  years 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.
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.
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  years
Rate Provider Hold until Prepayment options Payment
2.84% CanWise Financial
Lic. 12530
Apr 20
No pre-approval
15 % Lump Sum 15 % Regular $ Get this rate
2.89% Safebridge Verico
Lic. 10524
Jan 20
No pre-approval
15 % Lump Sum 15 % Regular $ Get this rate
3.09% C.M.B. Canada Mortgage Brokers Inc
Apr 20
No pre-approval
20 % Lump Sum 20 % Regular $ Get this rate
3.19% HSBC Mar 21 20 % Lump Sum 20 % Regular $ Get this rate
3.19% Scotiabank Feb 19 15 % Lump Sum 15 % Regular $ Get this rate
3.24% RBC Royal Bank Apr 20 10 % Lump Sum 100 % Regular $ Get this rate
3.29% TD Bank Apr 20 15 % Lump Sum 100 % Regular $ Get this rate
3.29% Bank of Montreal Mar 21 10 % Lump Sum 10 % Regular $ Get this rate
3.39% National Bank Mar 21 10 % Lump Sum 100 % Regular $ Get this rate
3.49% Laurentian Mar 21
No pre-approval
15 % Lump Sum 15 % Regular $ Get this rate
3.79% Tangerine Jan 20 25 % Lump Sum 25 % Regular $ Get this rate
4.44% PC Financial Apr 20 20 % Lump Sum 25 % Regular $ Get this rate
4.99% CIBC Mar 21 10 % Lump Sum 100 % Regular $ Get this rate
No pre-approval
Lump Sum N/A Regular N/A Get this rate

5-year Fixed Mortgage Rates

Historical 5-Year Fixed Mortgage Rates From 1973 - Today

  • Mortgage rate is fixed over a 5-year term
  • 66% of Canadians have 5-year mortgage terms
  • 66% of Canadians have fixed mortgage rates
  • 5-year mortgage rates are driven by 5-year government bond yields
  • Mortgage rate is fixed over 5-year term

5-year fixed mortgage rate defined

The '5' in a 5-year mortgage rate represents the term of the mortgage, not to be confused with the amortization period. The term is the length of time you lock in the current mortgage rate, while the amortization period is the amount of time it will take you to pay off your mortgage. The term acts like a reset button on your mortgage, at which point you must renew the mortgage at a rate available at the end of the term. So, for example, a typical mortgage has a 5-year term and a 25-year amortization period.

When the mortgage rate is 'fixed' it means that the rate (%) is set for the duration of the term, whereas with a variable mortgage rate, the rate fluctuates with the market interest rate, known as the 'prime rate'. So, for example, if the 5-year fixed mortgage rate is 4%, then you will pay 4% interest throughout the term of the mortgage.

An interesting feature of the 5-year fixed mortgage rate is that all borrowers must meet its standards of approval even if they choose a mortgage with a lower interest rate and shorter term. This benchmark is applied not only to reduce risk for the lender, but to give the borrower some breathing room.


Popularity of 5-year fixed mortgage rates

A 5-year mortgage term, at 66% of all mortgages, is by far the most common duration. It sits right in the middle of available mortgage term lengths, between one and 10 years, and, thus, its popularity reflects a risk-neutral average.

A further breakdown of mortgage terms shows that an additional 8% of mortgages have terms exceeding five years, while 26% of mortgages have shorter terms, including 6% with one year or less and 20% with terms from one year to less than four years.

Fixed rates are also most common, representing 66% of total mortgages as well. In terms of age dispersion, fixed rate mortgages are slightly more common for the youngest age groups, and older age groups are more likely to choose variable rate mortgages.

Mortgage popularity by length of term and age group1
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%

Comparing 5-year fixed mortgage rates

You can think of the difference, or spread, between variable mortgage rates and fixed rates as the price of insurance that mortgage costs will not increase in the next five years, more or less.

The advantage of fixed rate mortgages is that you know exactly how much your mortgage payments will be regardless of whether rates rise or fall. You can, essentially, set it and forget it. This eases the budgeting anxiety that may follow a variable rate mortgage.

When interest rates are low, and the spread between shorter-term rates and the 5-year fixed mortgage rates is less significant, it is typically recommended that you lock in the 5-year rate. The longer term offers stability and, because rates are historically low, the chances of rates decreasing further with a variable rate are greatly reduced.

On the other hand, as is the case with all fixed mortgage rates, there is the potential to pay higher interest when variable rates are low, and, examined historically, variable rates have proven to be less expensive over time.


What drives changes in 5-year fixed mortgage rates?

By and large, the 5-year fixed mortgage rate follows the pattern of 5-year Canada Bond Yields, plus a spread. Bond yields are driven by economic factors such as unemployment, export and inflation.

When Canada Bond Yields rise, sourcing capital to fund mortgages becomes more costly for mortgage lenders and their profit is reduced unless they raise mortgage rates. The reverse is true when market conditions are good.

In terms of the spread between the mortgage rates and the bond yields, mortgage lenders set this based on their desired market share, competition, marketing strategy and general credit market conditions.

5-Year Fixed Rates vs. 5-Year Bond Yields From 2000 - Today


Current Mortgage Rates


References and Notes

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