Find the best 5-year fixed mortgage rates in Canada

5-year fixed mortgage rates: Quick facts

• Mortgage rate is fixed over a 5-year term
• 5-year mortgage rates are driven by 5-year government bond yields

How are fixed mortgage rates determined in Canada?

Fixed mortgage rates in Canada are influenced by several key factors:

• Government of Canada bond yields: Fixed mortgage rates are closely tied to the five-year bond yield, which reflects what investors expect inflation, growth, and interest rates to look like over the next several years. When bond yields rise, fixed mortgage rates tend to increase; when yields fall, fixed rates often follow.
• Economic conditions: Inflation, employment, and economic growth affect bond markets well before central bank decisions are made. Strong economic data can push yields higher, while signs of slowing growth typically bring yields down.
• Credit market conditions: Lenders price fixed mortgages with an added spread over bond yields to account for credit risk, capital requirements, and market volatility. During periods of economic uncertainty or tighter credit conditions, these spreads can widen, keeping fixed rates elevated even if bond yields stabilize.

Because fixed rates are tied to bond markets, they can move independently of the Bank of Canada’s overnight rate — which is why fixed rates don’t always change when the central bank announces a rate cut or hold.

How will Bank of Canada decisions affect 5-year fixed rates?

Bank of Canada rate decisions do not directly set 5-year fixed mortgage rates, but they can still influence them indirectly through their impact on bond markets. When the Bank signals changes to its policy rate or future outlook, investors adjust their expectations for inflation and economic growth, which can cause Government of Canada bond yields to rise or fall.

If the Bank of Canada signals that interest rates will remain higher for longer, or expresses concern about inflation staying elevated, bond yields may increase. This can put upward pressure on fixed mortgage rates, even if the Bank does not raise its overnight rate. Conversely, when the Bank signals that rate cuts are coming or that economic conditions are weakening, bond yields often fall, creating room for lenders to lower fixed rates.

December 10, 2025, Bank of Canada announcement update

On December 10, 2025, the Bank of Canada left its overnight rate unchanged at 2.25%, maintaining the lowest policy rate seen since early 2022. 

• After seven cuts between mid-2024 and spring 2025, and two additional reductions this fall, the central bank has shifted again into a holding pattern. With the rate now sitting at the bottom of the Bank’s “neutral range,” policymakers signalled that further easing would risk pushing inflation upward, making today’s hold widely expected.

• The Bank’s decision reflects an economy that has shown surprising resilience. A stronger-than-forecast labour market added 54,000 jobs in November, lowering the unemployment rate to 6.5%, while third-quarter GDP grew 2.6%, exceeding the Bank’s projection. Inflation is also tracking near target, with October CPI at 2.2% and core measures continuing to cool. Together, these indicators reinforce the Bank’s stance that the current policy rate is appropriate to keep the economy steady.
• Variable-rate mortgage holders will see no change to their borrowing costs, as the prime rate remains at 4.45% and the lowest five-year variable rate holds at 3.45%. For new borrowers, today’s hold preserves access to the most favourable variable pricing since 2022. However, lenders may tighten their discounts to the prime rate, making early rate holds valuable.
• Fixed mortgage rates, meanwhile, continue to climb. Because these rates are influenced by Government of Canada bond yields, which have risen sharply following strong GDP and employment releases, lenders increased fixed-rate pricing by about 20 basis points. The lowest five-year fixed rate now sits around 3.89%, with further increases possible if yields continue trending upward. Existing fixed-rate borrowers remain insulated until renewal.
• Looking ahead, the path is uncertain. While the Bank’s base case points to extended stability, risks remain tied to global trade tensions and the upcoming USMCA renegotiation. Any tariff shock or deterioration in economic momentum could prompt a shift in policy. 

Read more: Bank of Canada holds target interest rate at 2.25% in December 2025 announcement

2025 housing and mortgage market update

Canada’s housing market faced a sharp slowdown over the course of 2025, as tariff concerns and economic uncertainty kept many buyers on the sidelines. However, affordability improved, as home prices decline and mortgage rates continue to fall.  

How do 5-year fixed rates compare to variable rates today?

In 2026, variable mortgage rates are tracking lower than 5-year fixed rates, giving borrowers a noticeable pricing advantage. As of January 2026, the best five-year variable rate is around 3.45%, while the best five-year fixed insured rate is closer to 3.89%. This gap reflects stable prime rates alongside fixed rates that continue to face pressure from elevated bond yields.

Despite this, fixed rates remain far more popular. In 2025, 77% of rate inquiries on Ratehub.ca were for fixed mortgages, compared to just 8% for variable rates, as many borrowers continue to prioritize payment certainty. Variable rates have trended lower since mid-2024 following multiple Bank of Canada rate cuts, while fixed rates have declined more gradually and remain sensitive to bond market movements.

Before switching, it’s important to compare the spread between your current rate and what’s available today, and to factor in any penalties for breaking your mortgage. Some borrowers also consider variable-rate mortgages with fixed payments, which offer stable monthly payments but can carry risks if rates rise sharply.

Is a 5-year fixed-rate mortgage a good idea right now?

Generally, a fixed-rate mortgage is a good choice if you are risk-averse and don’t want to deal with the stress that could come with a variable rate if the prime rate goes up over time and your mortgage payment increases. Before committing to a 5-year mortgage, you need to think about your personal situation today and going forward. If you are likely to move, change jobs, or otherwise embark on any life changes that may affect your ability or desire to remain in the home you are purchasing, you need to take this into account when selecting the mortgage that’s right for you.

Full feature mortgages vs. restricted mortgages

When comparing mortgage rates, it’s important to look beyond the headline number. The lowest advertised rate is often attached to a restricted mortgage, which limits flexibility in exchange for a lower price. A full-feature mortgage typically comes with a slightly higher rate, but offers more options if your situation changes.

Full-feature mortgages are designed for flexibility. They usually allow generous prepayment privileges, the ability to increase or double your regular payments, and the option to port your mortgage if you move before the end of your term. Restricted mortgages, on the other hand, offer lower rates but come with tighter rules. They often limit prepayments, restrict where you can move your mortgage, and can carry higher penalties if you break the term early. 

Pros and cons of a 5-year fixed mortgage

There are pros and cons to choosing a 5-year fixed mortgage rate, and we’ll walk you through each below. Some of the pros of a 5-year fixed mortgage are: 

• Risk protection: For buyers who are risk-averse; a fixed rate mortgage enables you to “set it and forget it” - your rate, and therefore mortgage payment, is locked in and will not fluctuate with changes in bond yields. This allows you to budget with greater accuracy and offers you stability for the duration of your term. Moreover, in recent years, Canadians enjoyed access to some of the best fixed rates available in decades, although fixed rates started to climb again in October of 2021. Since then, high inflation, global banking instability, an incredibly tight job market and other factors have all pushed bond yields up, and with them, fixed mortgage rates. Today’s fixed rates are now higher than they have been since back in 2009.
• Competitive rates: The 5-year term is historically the most popular option, and the one that lenders often encourage you to opt for. The length of this term is a good “middle of the road” choice for home buyers. Because it’s such a competitive, popular rate term, lenders often get the most aggressive when pricing these terms.

On the flip side, there are some cons to consider as well. 

• Higher rates: In order to guarantee your fixed rate, your lender will charge you a premium. According to York University Professor Moshe Milevsky’s landmark 2001 study, historically, over 90% of Canadians who have maintained a variable mortgage rate throughout their entire mortgage term have paid less in interest than those who have stuck to a fixed rate.
• Breakage penalties: While the 5-year term can offer you peace of mind, in the event that something such as a move, loss of a job, illness or divorce forces you to break your mortgage, you could be on the hook for a hefty break penalty. With a fixed mortgage rate, your penalty will be the greater of the interest rate differential (IRD) or three months’ interest. Oftentimes, the IRD penalty can be large, and thus a fixed rate mortgage can be expensive to break. If you have a variable rate mortgage, on the other hand, the penalty will always be three months’ interest, and it can therefore be less costly to break your mortgage. For a more detailed explanation of IRD and how it is calculated, you can refer to our Mortgage Refinance Calculator page. You can also use our Mortgage Penalty Calculator to estimate how much you might have to pay in the event that you have to break your mortgage. 

How 5-year fixed mortgage rates have changed over time

Looking at historical mortgage rates helps put today’s pricing into context. The table below shows the lowest annual high-ratio (insured) 5-year fixed mortgage rates in Canada over recent years, compared to several other types of mortgage rates.

Source: Ratehub Historical Rate Chart

Despite the ups and downs in interest rates over the years, the 5-year mortgage term remains the most popular choice in Canada. Sitting between short- and long-term options, it offers a balance of predictable payments and manageable commitment, which is why many borrowers view it as a comfortable middle ground. Major lenders also tend to price and promote 5-year terms competitively, reinforcing their appeal.

This preference extends beyond term length to rate type as well. According to the 2025 CMHC Mortgage Consumer Survey, 62% of mortgages contracted in 2025 were fixed-rate mortgages, reflecting a strong desire for payment certainty. Fixed rates remained the most common choice across first-time buyers, repeat buyers, renewers, and refinancers, as shown in the breakdown below.

For more information, check out these helpful pages 

• Best Mortgage Rates in Canada
• 5-Year Variable Mortgage Rates
• Variable or Fixed Mortgage Rates
• Amortization
• Mortgage Term vs. Amortization
• Is a 5-Year Fixed-Rate Mortgage Term Right For You?
• Porting and Assuming Your Mortgage