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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: A higher-than expected May CPI reading of 2.9% has driven bond yields back up to the 3.4% range, though fixed mortgage rates have yet to budge. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days. Variable rates are stable.

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2-yr

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Canwise

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3-yr

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Big 6 Bank

Prime - 0.90%

Canadian Lender

5-yr

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Canadian Lender

Prime - 1.25%

Canadian Lender

WATCH: June 5, 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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June 2024: Mortgage market update

The Canadian housing market has had a relatively quiet spring season, as home buyers appear to be awaiting the effects of lower mortgage rates. Now that the Bank of Canada has officially implemented its first quarter-point cut, home sales could pick up in the coming months.

Variable mortgage rates have dipped in kind following the central bank’s June rate cut, and markets are largely anticipating another to come in July, which will put further downward pressure on rates.

Fixed mortgage rates have also slightly decreased in response to lower bond yields, which are currently in the mid 3.3% range.

However, from a historical perspective, variable and fixed mortgage rates remain elevated. 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 June 17, 2024, the Canadian Real Estate Association (CREA) released the housing market numbers for the month of May. The data reveals that would-be home buyers remain in a holding pattern in anticipation that mortgage rates will lower in the near future. As a result, sales fell by -5.9% across Canada with a total of 51,219 transactions. On a monthly basis, activity was down 0.6%. However, sellers continue to list properties in the hopes that demand is poised to pick up; a total of 99,614 homes were brought to market in May, up 13.5% annually. The combination of slower sales and more supply caused the average home price to fall by -4% year over year to $699,117. Those who are looking to buy right now are enjoying more balanced market conditions, as the national sales-to-new-listings ratio (SNLR) fell to 52.8%. This indicates a balanced market as per CREA’s range of 45 - 65%. “May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower,” says Senior Economist Shaun Cathcart. “The Bank of Canada’s June 5 rate cut may have only been 25 basis points, but the psychological effect for many who have been sitting on the sidelines was no doubt huge. The question now turns to further rate cuts – specifically, how fast, and how far?”

    Read more: National real estate market stagnates in May ahead of rate cut effect

  • CPI update: The latest May inflation data, released by Statistics Canada on June 25, 2024, came in higher than expected, with the Consumer Price Index (CPI) rising by 2.9% on an annual basis. This is higher than the 2.7% reading that came out in April, and exceeds the 2.6% reading economists were calling for. According to StatCan, CPI was driven higher mainly by rising service costs, including cellular services, travel tours and air transportation, which rose 4.6% compared to 4.2% in April. Food costs also marked their first increase since June 2023, with a slight 1.5% uptick. However, StatCan notes that food costs now sit 22.5% higher than they did in May 2020. Shelter costs, which are made up of mortgage interest as well as rents, remained roughly flat, at 6.4%. However, a slight decrease in mortgage interest – due to lower mortgage rates in May – was offset by a spike in rent costs, particularly within Ontario, where they rose 8.4% this month compared to 6.1% in April. The Core inflation metrics – which are closely watched by the Bank of Canada when determining whether to hike, cut, or hold Canada’s benchmark borrowing rate – also increased, with the Median up 2.8% (compared to 2.6% in April) and the Trim rising 2.9% (from 2.8%). This calls into doubt whether the central bank will be in the position to cut rates again in its next announcement on July 24. “No bones about it, this is not what the Bank of Canada wanted to see at this point, and clearly shaves the odds of a follow-up July rate cut,” writes Doug Porter, Chief Economist and Managing Director of Economics at BMO following the CPI release. However, it doesn't rule out such a move, as we will see one more CPI (next one is July 16, eight days before the July 24 rate decision). With inflation back on a bumpy path, the outlook for BoC moves is similarly bumpy. For now, our official call remains that the next BoC rate cut will be in September, and this report does nothing to move that needle.”

Read more: Canadian CPI rises to 2.9% in May


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 492,083 homes will be sold in 2024, up 10.5% 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 4.9% to $710,468 in 2024.

Activity will continue to pick up steam in 2025, with sales to hit 530,494 units – an increase of 7.8%, and the national average home price to rise by 7% to $760,120.

Highlights from the Bank of Canada's June 5, 2024 announcement

At its fourth announcement of the year on June 5, 2024, the Bank of Canada lowered its target for the overnight rate by -0.25% from 5.00% to 4.75%. This is the first rate cut implemented by the central bank since March 2020.

  • The Bank pointed to steadily improving inflation data as the driver of its decision, with April’s CPI coming in at 2.7% and “core” trim and median measures down to 2.6% and 3.2%, respectively.
  • Anyone with a variable-rate mortgage or a home equity line of credit (HELOC) will undoubtedly be very pleased with the Bank’s decision, as their rates will finally begin descending from a nearly 20-year high.
  • Although fixed mortgage rates are tied to the bond market and are thus not directly impacted by the Bank of Canada’s rate cut, bond yields have dropped about 30 basis points in the days leading up to the Bank’s announcement. With a rate cut now having taken place, lenders are likely to reduce their fixed-rate mortgage products in the days to come.
  • Canadians looking to buy a home or whose mortgage is up for renewal should get a rate hold to ensure they can take advantage of the best rate possible. As mortgage rates go down during the time of your rate hold, you will be eligible for the lowest rate.
  • It will be interesting to see what effect this announcement will have on the housing market. While a 0.25% rate cut does not offer major relief from currently elevated prices and borrowing costs, buyers may be more inclined to enter a declining rate market, in part due to anxiety over missing their ideal buying window should demand ramp up.

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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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 80% of all mortgage requests made on Ratehub.ca from January to December 2023. Moreover, according to the 2024 CMHC Mortgage Consumer Survey, 69% of all mortgages contracted in 2024 were fixed-rate mortgages. 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. According to the 2024 CMHC Mortgage Consumer Survey, 23% of mortgages contracted during 2024 were variable-rate mortgages (down from 27% in 2023). 

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. 

How the stress test impacts mortgage qualification

In Canada, anyone applying for a new mortgage loan must pass the mortgage stress test. The purpose of the stress test is to ensure the borrower could still manage to make their mortgage payments in the case that interest rates rise over the course of their term. The criteria for the stress test is a benchmark rate of 5.25% or the borrower’s contract rate plus 2% – whichever is higher. For example, if your lender offers you a mortgage rate of 5%, you’ll need to prove you could afford to make your payments at 7% in order to pass the test and qualify for your mortgage loan.

The standards for the mortgage stress test are upheld by the Office of the Superintendent of Financial Institutions (OSFI), Canada’s federal banking regulator, for low-ratio, uninsured mortgages. The criteria for high-ratio and insured mortgages is governed by the federal Department of Finance, though they follow exactly the standards put in place by OSFI.

All mortgage borrowers must be stress tested, with two exceptions:

  • Borrowers who are renewing their mortgage term at their original lender often are not re-stress tested.
  • Borrowers with high-ratio, insured mortgages switching to another lender at renewal may not be stress tested, as long as the original terms of their loan and amortization do not change.

Read more about Canada’s mortgage stress test:

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.