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.
WATCH: October 25, 2023 Bank of Canada announcement
What is the best mortgage rate in Canada right now?
As of November 21, 2023, the best high-ratio, 5-year fixed mortgage rate in Canada is 5.29%, which is available across much of the country, including in Ontario, British Columbia and Alberta.
As of November 21, 2023, the best high-ratio, 5-year variable mortgage rate in Canada is 6%, which is available across Canada, including Ontario, Quebec, British Columbia and Alberta.
As of November 21, 2023, the average 5-year fixed mortgage rate available from the Big 5 Banks is 5.87%. Rates from the Big 5 Banks currently range from 5.69% to 5.99%.
To find the best mortgage rates in Canada in 2023, use our rate table to compare the lowest mortgage rates currently offered by Canada’s Big Banks and top mortgage lenders.
Will Canada mortgage rates go down or up in 2023?
Between January 2022 to December 2022 alone, fixed mortgage rates in Canada went up by nearly 100%. In the same time period, variable mortgages rates in Canada increased by an average of over 520%.
After a brief reprieve for much of the first half of 2023, the Bank of Canada carried out two consecutive rate hikes in June and July before announcing rate holds at its last two announcements on September 6 and, most recently, October 25. In the commentary accompanying its latest announcement, the Bank cited a number of key economic indicators that guided its decision to hold rates, namely GDP numbers, reduced consumer spending, softening in the national housing market and September’s lower-than-anticipated CPI figure of 3.8%. However, the Bank did note that inflation remained obstinately above its target of 2%, and made it very clear that it would proceed with further rate hikes if needed to bring inflation down to the desired level. We can expect the Bank to continue following a strictly data-dependent approach moving forward. As it stands, the chances of any rate decrease by the central bank seem virtually nonexistent in 2023 and likely not until the second half of 2024.
Fixed mortgage rates remain volatile and unpredictable, as they are tied to the bond market. A variety of domestic and international factors, including global banking instability, uncertainty about the US debt ceiling and concerns about inflation have sent bond yields on a rollercoaster in 2023 so far. After swinging up and down for most of the first half of 2023, fears related to persistently high inflation in both Canada and the US (among other factors) kept bond yields elevated throughout the summer and early fall. Current geopolitical instability coupled with fears of “higher for longer” interest rates kept bond yields hovering well above the 4% mark, soaring as high as 4.4% in mid-October (a level not seen since 2006). The Bank of Canada’s rate hold initially had little effect on the bond market, as it was widely expected. However, coupled with the US Federal Reserve’s decision to hold rates at its last announcement on November 1, bond yields are finally coming down, and are currently in the 3.8% range. This has allowed a number of lenders to reduce their fixed-rate mortgage offerings; to put it in context, the best 5-year fixed mortgage rate you could have gotten on November 6 was 5.64%, while the best 5-year fixed mortgage rate available on November 21 is 5.29%. Should bond yields continue their downward trajectory, fixed mortgage rates could fall further.
How high will Canada mortgage rates get?
The Bank of Canada released a previous report that predicted fixed rates will be at an average of about 4.5% by 2025. This average is actually less than the current average fixed mortgage rate across Canada’s Big 5 Banks (as of November 21, 2023). After a brief period in April and May when tumbling bond yields allowed lenders to discount their fixed mortgage rate products slightly, consecutive rate hikes in June and July and anxieties connected to geopolitical turbulence and uneasiness over the prospect of “higher for longer” interest rates kept bond yields elevated throughout the summer and into the fall. They reached as high as 4.4% in mid-October (a level not seen in 16 years), which, in turn, pushed fixed mortgage rates upward. In the wake of the Bank’s October 25 rate hold (the second in a row), bond yields at first reacted minimally, as the Bank was widely expected to maintain its key rate. However, coupled with the US Federal Reserve’s decision to hold rates as well at its November 1 announcement, this has caused bond yields to come down substantially, down to the 3.8% range. This has allowed fixed mortgage rates to come down somewhat, and, should bond yields continue to descend, we can expect further downward pressure on fixed mortgage rates.
In its October 25 announcement, the Bank of Canada was crystal clear about its firm resolve to bring inflation down to its target of 2%, and did not rule out the possibility of further rate hikes if deemed necessary to bring inflation under control. Moreover, it reaffirmed its commitment to using a data-driven approach when determining how it would act moving forward. It therefore remains possible that the Bank will raise its target for the overnight rate again if it feels it necessary to do so, but more data would be needed for that to happen. It is reasonable, however, to expect that neither variable nor fixed Canada mortgage rates will substantially decrease in 2023 or until the second half of 2024.
How does inflation affect mortgage rates in Canada?
To combat rising inflation, the Bank of Canada increases its target for the overnight lending rate (also known as the benchmark interest rate in Canada). This in turn makes it more expensive for consumers and businesses to borrow money and incentivizes savings. As a result of people spending less and saving more, demand in the market goes down, which then decreases the rate of inflation.
When the Bank of Canada increases its benchmark interest rate, banks and other mortgage lenders also increase their prime lending rates. Since variable mortgage rates are directly tied to a lender’s prime rate (in fact, variable mortgage rates are calculated as a discount from the prime rate), when the Bank of Canada hikes its key interest rate, variable mortgage rates consequently also go up.
Fixed mortgage rates, on the other hand, are not tied to the prime rate. Instead, they are directly related to 5-year bond yields. As bond yields increase, the cost to lend money also increases. As a result, lenders raise their fixed mortgage rates.
Following surging inflation in 2022, bond yields steadily increased between early March 2022 and November 2022, along with fixed mortgage rates. Starting in December 2022, bond yields have been quite volatile. They fell in December and January before ticking up again, pushing fixed rates upwards with them. Global banking instability sent bond yields plummeting in March before stabilizing again in April and May. Then, consecutive rate hikes by the Bank of Canada in June and July helped keep bond yields elevated throughout the summer. While bond yields fell slightly in response to the Bank of Canada’s September 6 rate hold, they went climbing again shortly thereafter, fuelled in large part by concerns about elevated US inflation and resulting rate hikes by the Fed. The Labour Force report from Statistics Canada showed that the economy added 64,000 jobs in September, double what was expected. Bond yields climbed past the 4.4% mark, which forced lenders to raise their fixed mortgage rates in the latter part of October. Initially, bond yields reacted minimally to the Bank of Canada's October 25 rate hold, which was widely expected, but, coupled with the US Federal Reserve’s decision to maintain rates on November 1, bond yields are at long last coming down. They currently are in the 3.8% range, which has allowed fixed mortgage rates to come down somewhat in tandem. Should they continue to drop, we can expect that fixed mortgage rates will also decrease further.
How do I get the best mortgage rate in Canada in 2023?
Make sure you compare mortgage rates across the different banks, credit unions and top mortgage lenders in Canada. You can use our rate table above to compare the best mortgage rates in just a glance.
After comparing the different Canada mortgage rates currently available, you should then get a personalized quote to see which mortgage rate you can actually get given your situation. At Ratehub.ca, we can provide you a quote in just 2 minutes. To get a mortgage quote, enter some basic information (i.e. down payment amount, purchase price, location) so we can show you the lowest rate you can actually get.
What is Canadian Lender and Big 6 Bank?
On our rate comparison tables, Ratehub.ca features generic brands like “Canadian Lender”. The “Canadian Lender” rate represents the lowest rate our brokerage can offer among the different lenders we work with. This means that this rate can be from a Big Bank, trust company or lending company. The reason we do not advertise the rate under the name of the actual lender offering it, is because the rate is only available through our brokerage, via a special volume discount or promotion.
Similarly, “Big 6 Bank” is another generic provider that is used to advertise the lowest Big Bank rate that the Ratehub.ca brokerage can offer.
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The Canadian mortgage market has seen considerable volatility in recent months, and the first months of the fall are no exception. Surging bond yields have continued to put upward pressure on fixed mortgage rate pricing, while variable mortgage rates remain elevated following the Bank of Canada’s June and July rate hikes 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.
November 2023 mortgage market update
Bond market update: After an autumn of historically elevated levels, Canadian bond yields have started to cool in response to recent rate holds from both the Bank of Canada and US Federal Reserve.
The five-year Government of Canada bond yield has moderated to the 3.7% range, down from the high of 4.4% witnessed in October – a 17-year record. This has paved the way for lower fixed mortgage rates, as lenders use bond yields to set the threshold for their fixed-rate product pricing. In the first week of November, a number of lenders decreased their fixed-rate offerings by roughly 30 basis points.
While it’s difficult to predict whether bond yields will continue to cool, a number of recent economic reports support the rationale for central banks to end their rate hiking cycles, such as softer-than-expected jobs and GDP reports. Inflation, which is a major factor behind rate hikes, is also starting to move in the right direction in Canada, with the CPI measure coming in at 3.1% in October. It is now virtually certain that the Bank of Canada will hold its trend-setting rate once more in its upcoming announcement on December 6th, with analysts increasingly forecasting rate cuts as early as the second half of 2024.
CPI update: The pace of inflation is one of the most closely-watched economic metrics, and helps the Bank of Canada determine its next step in regards to interest rates. The BoC uses its Overnight Lending Rate – also referred to as its benchmark or policy rate – to respond to inflation, with the goal of keeping it within a 2% growth target range. The BoC hikes its Overnight Lending Rate when inflation trends too hot, in efforts to chill spending and borrowing. In the case inflation – and overall economic activity – becomes too soft, the Bank will then cut its rate, in order to stimulate spending.
The latest Canadian consumer price index (CPI) data (released on November 21) for October 2023 shows headline inflation growth came in at 3.1%, roughly in line with economists’ expectations, and down from the 3.8% growth recorded in September. Month over month, CPI rose a scant 0.1%, following a decline by the same size in September, and 0.4% growth in August.
Softening gas prices were the largest contributor to the lower inflation number, falling -7.8%. However, factors such as mortgage interest costs and rents remain steeply high, rising 30.5% and 8.2% on an annual basis, respectively. Service prices are also continuing to put pressure on the CPI, rising 4.6% on a year-over-year basis following a 3.9% increase in September. Grocery costs, however, decreased to 5.4% from 5.8% in September.
Another positive development was a dip in the Core inflation measures monitored by the Bank of Canada, which strip out the most volatile costs, such as gas and food. That dipped to 3.6%, down from 3.7% last month. Overall, the inflation numbers support another rate hold from the Bank of Canada in its upcoming announcement on December 5, marking the third time in a row the central bank has not changed rates, and ushering in continued stability for mortgage borrowers for the remainder of the year.
Real estate update: On November 15, 2023, the Canadian Real Estate Association released the statistics for the Canadian housing market for the month of October. According to the numbers, home buyer activity continued to decline into the autumn months, marking a much softer fall than is typical in terms of demand.
According to CREA, home sales dropped in the majority of markets across the country.
A total of 33,921 homes sold nationwide during October, marking a -5.6% decline from September, and relatively flat on an annual basis, with just a 0.9% increase year over year. The average Canadian home price rose slightly to $656,625, up 1.8% from the same time period in 2022, but roughly unchanged from the previous month.
Some 70,020 properties came to market during October, marking a month-over-month drop of -2.3% – the first time since March that this has declined. On an annual basis, though, new supply is still up by 16%.
As the decline in the number of sales still outpaced the decline in new listings, the sales-to-new-listings ratio – which CREA uses to measure the level of competition in the market – dropped to a 10-year low of 49.5%. That firmly places Canada’s housing market in balanced market territory, and is down considerably from the high recorded this past April of 67.9%.
It’s expected that activity will remain low until at least the spring market, assuming the Bank of Canada lowers or keeps its benchmark interest rate unchanged.
Highlights from the Bank of Canada's October 25, 2023 announcement
On October 25, 2023, the Bank of Canada held its target for the overnight rate steady at 5.00%.
- Multiple factors paved the way for the Bank of Canada to hold rates, including flat retail sales, softening GDP and a cooler-than-expected CPI of 3.8% in September, which indicate that the effects of previous rate hikes are being felt.
- While Canadians with variable-rate mortgages and home equity lines of credit (HELOC) will be glad to see rates remaining stable, the Bank’s commentary will likely have them feeling uneasy about how long rates will stay high.
- Fixed rates are not directly affected by the Bank of Canada’s rate hold, but the bond market has not reacted significantly to today’s announcement, as a hold was widely expected. This means that fixed mortgage rates will remain at their current elevated levels.
- Canadians looking to buy a home or whose mortgage is up for renewal should get a rate hold now to protect themselves against any further rate increases.
- The real estate market has slowed down across the country, and, as a result, inventory is building, transactions are falling and prices are softening. If you’re looking to sell your home and purchase a new one, it’s best if you sell first and purchase afterwards once you know what your actual sale price will be.
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.
Compare current mortgage rates across the Big 5 Banks and top Canadian lenders. Take 2 minutes to answer a few questions and discover the lowest rates available to you.
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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 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 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.
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.