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Best mortgage rates in Canada

To see the current best Canada mortgage rates from the Big 5 Banks, click on the "Best bank rates" tab.

Ratehub.ca Insights: No change for fixed mortgage rates, though bond yields softened to the upper 3.5% range as this week's GDP data cements expectations of another Bank of Canada rate hold. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days. Variable mortgage rates are stable.

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Term
Fixed
Variable

2-yr

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Big 6 Bank

3-yr

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Desjardins

Prime - 0.90%

Canadian Lender

5-yr

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Canadian Lender

Prime - 1.25%

Canadian Lender

WATCH: January 24, 2024 Bank of Canada announcement

Canada mortgage rates: Frequently asked questions

What is the best mortgage rate in Canada right now?


Will interest rates in Canada go down in 2024?


What is the lowest mortgage rate in Canadian history?


How does inflation affect mortgage rates in Canada?


How do I get the best mortgage rate in Canada in 2024?


What is Canadian Lender and Big 6 Bank?


Best Canada mortgage rates comparison

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February 2024: Mortgage market update

The Canadian mortgage market has seen considerable volatility in recent months, and the beginning of the year is proving to be no exception. Once-surging bond yields tumbled in December and into January before climbing once again in February and exerting upward pressure on fixed mortgage rates. Meanwhile, variable mortgage rates remain elevated following the Bank of Canada’s historically steep rate-hiking cycle from March 2022 to July 2023 that brought the target Overnight Lending Rate to 5%. If you're shopping for a mortgage rate in Canada right now, here are some economic factors you should be aware of.

  • Real estate update: On February 14, 2024, the Canadian Real Estate Association (CREA) released the statistics for the Canadian housing market for the month of January. The most recent data reveals that the housing market in Canada appears to be showing signs of recovery after a sluggish end to 2023. A total of 25,540 residential properties changed hands over the course of January, up by a whopping 22% from the same period last year, and up on a monthly basis by 3.7%. “Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years,” said Shaun Cathcart, CREA’s Senior Economist. Some 51,983 new listings came on the market, marking a yearly increase of 10.5% and a monthly increase of 1.5%. However, this new supply was not enough to counteract the effects of renewed demand; the average national home price increased by 7.6% year over year to $659,395 in January 2024 (up from $657,145 in December). Renewed market activity has seen the sales-to-new-listings ratio (SNLR) tilt progressively further towards the “seller-friendly” end of the spectrum, jumping to 58.8% from under 50% just three months prior. The SNLR is used to gauge buyer competition in any given housing market; a ratio between 40 - 60% indicates balanced conditions, with above and below that threshold reflecting sellers’ and buyers’ markets, respectively.
     
    Read more: Canadian realtors hopeful sales growth will continue

  • CPI update: In some good news to kick off the year for consumers, the January Consumer Price Index (CPI) numbers reported by Statistics Canada on February 20th, 2024, reveal the headline inflation measure rose by just 2.9% on an annual basis. That’s well below economists’ expectations of 3.3%, and marks the first time since March 2021 that inflation grew below 3%. Softening gas prices were the largest contributor to lower inflation, coming in at 3.2% compared to 3.5% in December, and down for the fifth month in a row. Food costs were also down considerably by 3.4%, compared to 4.7% in December. In addition to a lower headline number, the “core” inflation measures that are closely monitored by the Bank of Canada – called the trim and median – also softened, down to 3.4% and 3.3%, respectively. The January reading now puts inflation within the Bank of Canada’s 1 - 3% target band, and strengthens rationale for the central bank to continue to hold rates for the time being. Should this trend persist in coming months, economists expect rate cuts could occur as soon as Q2 2024.

Read more: Inflation falls to 2.9% in January


2024 Housing Market Forecast

CREA also updated its forecast for 2024 and 2025, due to growing expectations of rate cuts, and pent-up home buyer demand.

It anticipates a total of 489,661 homes will be sold in 2024, up 10.4% from 2023. Sales growth is expected to be strongest in provinces where housing demand has been consistent, such as Alberta. However, markets that have seen “historically low sales volume”, such as Ontario, BC, and Nova Scotia, will also see growth. The national average home price will rise by 2.3% to $694,173 in 2024, with the largest increases in  Alberta, Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador. British Columbia and Ontario home prices, however, are forecast to be flat.

Activity will continue to pick up steam in 2025, with sales to hit 525,498 units – an increase of 7.3%, and the national average home price to rise by 4% to $722,063.



Highlights from the Bank of Canada's January 24, 2024 announcement

At its first announcement of the year on January 24, 2024, the Bank of Canada kept its target for the overnight rate unchanged at 5.00% for the fourth time in a row.

  • A number of key economic indicators justified yet another rate hold, including weakening economic growth, reduced consumer spending and contracting business investment. 
  • While the Bank noted that inflation is gradually easing, it remained well above target at 3.4% in December, and consequently, higher rates need to be maintained for longer to rein it in. 
  • While Canadians with variable-rate mortgages and home equity lines of credit (HELOC) will be pleased to see their rate remain stable, they will likely be disappointed that the Bank did not provide any hints as to when there might be a rate cut. 
  • Although fixed mortgage rates are not directly affected by the Bank of Canada’s rate hold, in light of December’s higher-than-expected CPI figure and the resulting spike in bond yields, many lenders had been holding their fixed rates steady until they could see what the Bank would say. In the absence of any new information in the Bank’s announcement today, lenders may consider moving their fixed mortgage rates higher. 
  • Canadians looking to buy a home or whose mortgage is up for renewal should get a rate hold now to protect themselves from any further rate increases. Should mortgage rates (namely fixed mortgage rates) go down during the time of your rate hold, you are still eligible for the lowest rate. 
  • This announcement is unlikely to have much effect on home values, as it is essentially more of the “wait and see” stance that we have seen from the Bank in the last few months. Had the Bank indicated that rate cuts are on the horizon, home prices would have started experiencing almost immediate upward pressure.

Factors that can affect your mortgage rate in Canada

It’s important to understand that the best mortgage rate you qualify for may change depending on your unique borrowing profile. Here are some of the factors that influence what mortgage rate you qualify for:

The type of mortgage: If your mortgage is for a refinance, rather than a purchase or renewal, you’ll be eligible for higher rates. For individuals with an existing mortgage who have good credit and more than 20% equity in their homes, in addition to refinancing, you can also explore a home equity line of credit (HELOC).

Your down payment: If you’re purchasing a home and your down payment is less than 20% of the purchase price and the value of the home you are purchasing is less than $1 million, you’ll be required to purchase mortgage default insurance (sometimes known as CMHC insurance). This insurance is added to your mortgage amount and, while it will cost you money, it will result in a lower mortgage rate as your mortgage is less risky for your lender. If you’re renewing your mortgage, in order to be eligible for the lowest mortgage rates you would have needed to purchase CMHC insurance on the original mortgage. 

Your intended use of the property: Your mortgage rate will be higher if you plan to rent your property out vs. live in it as your primary residence.

Your amortization period: Insurable mortgages (i.e. mortgages for homes valued at less than $1 million with a down payment of less than 20% of the purchase price) in Canada have a maximum amortization period of 25 years. Regardless of the price of your home, if you make a down payment of at least 20%, you are able to access a mortgage that allows a longer amortization period, such as a 30-year period. While longer amortization periods will usually result in a lower monthly payment, they can come with a slightly higher interest rate. Moreover, by taking longer to pay back the mortgage, you will pay more in interest overall than you would with a shorter amortization period.

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4.84%

Best fixed rate in Canada

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How to choose between a fixed or variable mortgage rate in Canada

Variable vs. fixed mortgage rates

The difference between fixed and variable mortgage rates is whether or not they will change over the term of your mortgage. Fixed rates will stay the same over the course of your mortgage term (usually 5 years), while variable rates will change alongside changes in your lender’s prime rate.

Fixed mortgage rates:

Fixed mortgage rates are a historically popular option, with 5-year fixed mortgage rates accounting for nearly 80% of all mortgage requests made on Ratehub.ca from January to September 2023. The benefit of a fixed mortgage is that you are protected against interest rate fluctuations, so your regular payments stay constant over the duration of your term, regardless of what happens in the market. A fixed rate mortgage is ideal for you if you have a low appetite for risk. You’ll know how much you’ll be paying monthly right from the outset and not have to monitor interest rates.

Variable mortgage rates:

Variable mortgage rates are typically lower than fixed rates but can vary over the duration of your term. Variable mortgages are prone to market behaviour (via the prime rate) which affects your payments. That means your payment amounts can change over time. Variable rates remained substantially lower than fixed rates throughout 2021 and into 2022, leading a large number of buyers to opt for 5-year variable-rate mortgages. However, as variable-rate mortgages climbed to rates that are higher than fixed-rate mortgages over the course of ten rate hikes between March 2022 and July 2023, their popularity has substantially diminished.  

While variable rates are generally lower, they do fluctuate and can be viewed as more risky when compared to fixed rates. Moreover, variable rates have actually been higher than fixed rates since the end of 2022. That said, variable mortgage rates have some key advantages you should know about:

  • You can convert a variable rate to a fixed rate at any time without a penalty as long as you stay with your original mortgage lender.
  • Breaking a variable rate mortgage is substantially less expensive than breaking a fixed rate mortgage. To estimate the cost of breaking your mortgage, our mortgage penalty calculator is a useful tool. 

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.

How to select the term for your mortgage rate

Choosing between a short-term mortgage or a long-term mortgage can also affect your interest rate. A short-term mortgage generally offers a lower rate, and, as it requires more frequent renewal, you can benefit from lower interest rates when you renew, if rates stay low at your renewal. Long-term mortgages, on the other hand, offer stability, as you won’t need to renew it often. However, long-term mortgage holders may not be able to take advantage of lower interest rates if the market fluctuates. 

Open vs. closed mortgages

If you’re wondering whether to get an open or closed mortgage, the answer is, while an open mortgage may make sense in certain circumstances, the overwhelming majority of Canadians opt for a closed mortgage. While open mortgages have extra flexibility that you might need, closed mortgages are by far the more popular choice not only due to their lower rates, but also because most home buyers do not intend to pay off their mortgages in the short term. Moreover, fixed-rate open mortgages do not exist and variable-rate mortgages are very rare. The most common type of open mortgage is the Home Equity Line of Credit (HELOC). Below are some quick facts about the differences between open and closed mortgages, and you can also find more detailed information on our blog about open vs. closed mortgages.

Closed mortgages:

Closed mortgages have lower rates compared to open mortgages. Closed mortgages can come in fixed and variable form, but place restrictions on the amount of principal you can pay down each year. If you pay off the entire principal in a closed mortgage before the set term, you will face a prepayment penalty, which is normally a 3-month interest charge.

Open mortgages:

Open mortgages allow you to pay off your entire mortgage balance at any time throughout the term. The drawback is that you pay a premium for that option in the form of higher rates. You might opt for an open mortgage if you are planning to move in the near future, or if you’re expecting a lump sum of money through an inheritance or bonus that would allow you to pay more of your mortgage off.

How do I qualify for a mortgage in Canada?

While it’s important to think about qualifying for the best rates, you should also give some thought to the basics that you’ll need to qualify and get approved for your mortgage. To qualify for a mortgage, here are some of the most important things that prospective lenders will want to see.  

A good credit score - You should have a credit score of 680 or higher to qualify for the best mortgage rates, but to qualify for a mortgage at all, you’ll need a credit score of at least 560. In addition to looking at your credit score, prospective lenders will also consider any derogatory information from your credit report, such as any missed payments (particularly if they have gone to collections). If you have bad credit, generally defined as a credit score of less than 660, you are unlikely to qualify for the best mortgage rates, and instead you’ll need to use a sub-prime mortgage lender like Equitable Bank or Home Trust. If your credit score is even less than 600, you will most probably need to use a private lender like WealthBridge. Sub-prime mortgage lenders are happy to work with people with a poor credit history, but they will charge higher mortgage rates. It's a good idea to have a detailed understanding of how your credit score affects your ability to obtain a mortgage.

Proof of income - You’ll also need to provide proof of income in the form of pay stubs and/or tax documents like your Notice of Assessment (NOA). Keep in mind that if you recently started a new job, even with proof of income, many lenders will want to see that you’ve held the position for at least a year. 

Ability to pass a mortgage stress test - Finally, to be eligible for the mortgage amount you want, you will need to pass a mortgage stress test. The stress test ensures that you can still afford your mortgage payments at a higher mortgage rate, which is the higher of your contract rate + 2%, or what is called the "qualifying rate" and is set by the Office of the Superintendent of Financial Institutions (OSFI). So, for example, if you were being offered a mortgage rate of 4.45%, the lender might do a stress test to see if you could still afford payments at 6.45% (4.45% + 2%), as that is higher than the qualifying rate of 5.25%. 

Historical Canada mortgage rates

Looking at historical mortgage rates in Canada is a good way to understand which types of mortgage attract higher rates. They also make it easier to understand whether we’re currently in a low or higher rate environment, relatively speaking.

Here are some of the lowest Canada mortgage rates of the year for different types of mortgages over the past five years.

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Is it worth working with a mortgage broker?

First, what exactly is a mortgage broker? Independent mortgage brokers are licensed mortgage specialists who have access to multiple lenders and mortgage rates. They essentially negotiate the lowest rate for you, and because they acquire high quantities of mortgage products, mortgage brokers can pass volume discounts directly to you. There are advantages to getting a mortgage directly from a lender as well as getting a mortgage through a broker, but there are differences between going with a bank vs. a mortgage broker. While going directly to your current bank lets you consolidate your financial products, using a broker allows you to shop around quickly and easily, at no cost to you.

Luckily, you don’t need to choose one or the other. You can speak to multiple banks and use a mortgage broker if you want to. Ratehub.ca is a great place to start, as we compare the best mortgage rates in Canada from multiple lenders. Once you’ve compared your options, we can put you in contact with your chosen provider.