Find the best 5-year fixed mortgage rates in Canada

June 2025: Mortgage market update

Canada’s housing market faced a sharp slowdown in early 2025, as tariff concerns and economic uncertainty kept many buyers on the sidelines. However, affordability is improving, as home prices decline and mortgage rates continue to fall. The Bank of Canada has now implemented seven consecutive rate cuts and two rate holds, stabilizing its benchmark rate at 2.75%. 

If you’re looking for a mortgage rate in Canada right now, these are some important economic factors to know.

• Real estate update: Canada’s housing market showed tentative signs of warming in May 2025, following months of muted activity. National home sales rose 3.6% month over month to 49,423 units, according to the Canadian Real Estate Association (CREA). While that’s still 4.3% lower than May 2024, the year-over-year decline narrowed from April’s 9.8% drop. CREA’s Senior Economist Shaun Cathcart noted that the uptick in sales, the first since November 2024, may reflect improving buyer confidence. Listings also saw an uptick, with 109,077 properties brought to market, up 3.1% from April and 8% from last year. With both monthly sales and supply rising in step, the national sales-to-new listings ratio (SNLR) remained stable at 47%, consistent with balanced market conditions. Inventory also improved slightly, with 201,880 homes available for sale — a 13.2% annual increase. The national average home price reached $691,299 in May, up from April but still down 1.8% year over year. Meanwhile, CREA’s MLS Home Price Index, a better reflection of typical home values, held steady month over month, pausing after three straight months of decline. CREA emphasizes that a single month’s data is not enough to call a market turnaround. While variable interest rates remained unchanged, with the Bank of Canada holding its key overnight rate at 2.75% through both its April and June announcements, fixed rates remain elevated due to rising bond yields. Buyers may want to consider securing a rate hold or pre-approval to lock in current pricing.

Read more: Canadian home sales stabilize in May

• CPI update: Canada’s inflation rate remained unchanged in May 2025, with the Consumer Price Index (CPI) rising 1.7% year over year, according to the latest data from Statistics Canada. This reflects the continued deflationary impact of the federal carbon tax removal, particularly on energy prices. Gasoline prices fell 15.5% annually – a lower decline than April’s 18.1% drop. When energy is excluded from the CPI basket, inflation would have risen 2.7%, suggesting broader price pressures. Food prices remained a key source of pressure, up 3.4% from last year. Both grocery store and restaurant food costs climbed 3.3%. On the other hand, shelter costs saw slower growth in May, contributing to the softening inflation picture. The shelter index rose 3% compared to 3.4% in April, as rental price growth cooled to 4.5% year over year and mortgage interest costs rose 6.2% in May, compared to 6.8% in April. This continued decline reflects the cumulative effects of the Bank of Canada’s rate cuts and a sustained drop in bond yields. Core inflation, a key focus for the Bank of Canada, also showed slight improvement. The CPI-median and CPI-trim both fell to 3% in May, from 3.1% in April. While this modest drop signals progress, it likely isn’t enough to justify another rate cut when the Bank announces its policy decision on July 30th. Signs of economic strain from ongoing U.S. tariffs are also emerging, with manufacturing sales slipping 1.3% in May. Policymakers will be watching closely for further evidence before making their next move.

Read more: May 2025 CPI remains stable at 1.7%

June 4, 2025, Bank of Canada announcement update

On June 4, 2025, the Bank of Canada held its overnight rate steady at 2.75%. This decision maintains the pause that began in April, following a total of 225 basis points in cuts between June 2024 and March 2025.

• The decision reflects ongoing uncertainty around U.S. tariffs, early signs of economic cooling, and inflation that remains above the Bank’s 2% target. Core and headline inflation both came above expectations, at above 3% and 2.3%, respectively in April.
• For mortgage holders, the prime rate remains at 4.95%, leaving variable mortgage rates unchanged. The lowest available five-year variable rate in Canada continues to sit at 3.95%.
• Fixed mortgage rates remain elevated due to persistently high bond yields. The Government of Canada’s five-year bond yield is currently in the 2.8% range, influenced by inflation expectations and increased federal bond issuance. The best five-year fixed insured rate is now 3.84%.
• The rate hold also ensures stability for savers with high-interest savings accounts (HISAs) and Guaranteed Investment Certificates (GICs), as they’ll see no change to their returns.
• The Organisation for Economic Co-operation and Development (OECD) forecasts an additional 50 basis points in rate cuts by the end of 2025 as the Canadian economy weakens. Growth is projected to slow to 1% this year and 1.1% in 2026, down from 1.5% in 2024.

Housing market forecast for Canada for 2025

CREA has revised its 2025 and 2026 housing market forecasts, adjusting expectations for both home sales and average home prices due to ongoing economic uncertainties, particularly stemming from a potential trade war. CREA’s updated forecast indicates that 482,673 residential properties are expected to be sold in 2025, representing a small decline of 0.02% from 2024. This marks a significant downward revision from the 8.6% growth originally projected in January. Additionally, the national average home price is now expected to decrease slightly by 0.3% to $687,898 in 2025, reflecting a $30,000 reduction from the earlier forecast. For 2026, CREA anticipates a slight improvement in home sales, with a forecasted 2.9% increase to 496,487 units sold. However, sales are expected to remain below the half-million mark for the fourth consecutive year. The national average home price is projected to rise by a modest 1.2% in 2026, reaching $696,074. Given the current unpredictability in the economy and interest rate movements, the forecast remains highly uncertain.

How U.S. tariffs impact Canadian mortgages and the housing market

On April 2, 2025, after months of uncertainty regarding U.S.- Canada trade relations, the U.S. clarified the details of its tariff strategy. While the U.S. had previously discussed imposing new tariffs, Canada was largely exempt from these, including the 50% reciprocal tariffs imposed on other countries. However, Canada still faces a 25% tariff on non-CUSMA imports, as well as the 25% tariff on steel, aluminum, and foreign cars and parts.

These tariff escalations have rattled global markets. In Canada, the Government of Canada bond yield fell to 2.488% on April 3, 2025 — the lowest since 2022. As a result, Canadian fixed mortgage rates have dropped significantly in recent weeks. Rates for insured mortgages are now as low as 3.74%, and uninsured mortgage rates are at 3.99%. 

The Bank of Canada (BoC), initially expected to cut its trend-setting Overnight Lending Rate in response to the economic uncertainty, may instead decide to hold rates steady. The BoC has made it clear that while it will continue to monitor the global situation.

The overall impact of the tariffs has caused a slowdown in the Canadian housing market. While there was previously pent-up demand and an expectation of a strong spring season, the uncertainty surrounding tariffs has made homebuyers more cautious. February data from the Canadian Real Estate Association (CREA) showed a 10.4% year-over-year drop in home sales.

Also read: How could 25% US tariffs impact Canadian mortgage rates?

Canadian mortgage reform update

On September 16, 2024, the federal government announced sweeping changes to mortgage qualification rules for first-time home buyers, as well as those purchasing newly-constructed homes.

As of December 15, 2024:

• 30-year amortizations will be available for all first-time home buyers, regardless of whether they have an insured mortgage. These extended amortizations are also available for any purchase of new construction.
  
  
• The maximum purchase price for an insured mortgage (where less than 20% down is paid) will be increased to $1.5 million, from the current $1 million.
  

These are some of the most impactful mortgage reforms announced since 2012, and are anticipated to increase first-time home buyers’ affordability and access to the housing market. 

Learn more about these new mortgage rule changes on the Ratehub.ca blog

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
  

What makes a 5-year fixed-rate mortgage right for me?

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

While it’s always desirable to obtain the best mortgage rate, in today’s historically high rate environment, the quest to find the lowest rate seems more important than ever. It also means that one needs to be vigilant about choosing the right mortgage for your needs. The lowest rate that you see advertised may not be what you want, because it could well be for a restricted mortgage. Although the low rates of a restricted mortgage may catch your eye, it’s important to understand the drawbacks. A full feature mortgage will have a higher interest rate, but it will also have a number of features that make it very desirable, including:

• Pre-payment options: Take a look at what pre-payment options your lender is willing to offer you. The more flexible your lender is with pre-payment options, the faster you can potentially pay off your loan, which could save you thousands of dollars in interest fees. The main pre-payment options are monthly pre-payment and lump sum pre-payment. In the case of the former, you’re allowed to increase your monthly payment up to a certain percentage determined by your lender, maxing out at 100%. If you had a lender who was flexible enough to allow you to double your monthly payments, for example, you could in theory pay your mortgage off in half the time if you were able to do so. The latter option, lump sum pre-payment, allows you to pay off up to say, 25% of your mortgage loan, again, depending on your lender.
• Porting your mortgage: If you need to sell your home before the end of your mortgage term, many lenders will allow you to port your mortgage. Porting a mortgage means to take your current mortgage with its existing rates and terms and transfer it to another property, and allows you to avoid breaking your mortgage. You’ll want to talk to your lender about how portable your mortgage is, particularly if you think you may need to move before your term is up. Not all mortgages are portable, and many that are portable have conditions attached that you should be aware of.
• Lump sum pre-payment privileges: You are allowed to make multiple lump sum pre-payments to bring down your mortgage balance in a given calendar year. Most lenders will cap the amount of pre-payments you can make, e.g. you cannot pay more than 20% of your principal in a single year.
• Payment flexibility: If you choose to increase the size of your regular mortgage payments, you are able to do so without incurring any penalties or fees.

These are just some of the most common features you’ll find in a full feature mortgage that make them so convenient for homebuyers. To learn more about the mortgage that’s right for you, it’s always a good idea to speak with a mortgage broker. They can give you personalized, expert advice at no cost to you.

What are some of the 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. 
  

Historical 5-year fixed mortgage rates

Looking over historical mortgage rates is the best way to understand which mortgage terms attract lower rates. They also make it easier to understand whether rates are currently higher or lower than they have been in the past.

Here are the lowest (high-ratio, insured) 5-year fixed rates of the year in Canada for the last several years, compared to several other types of mortgage rates.

Source: Ratehub Historical Rate Chart

The popularity of 5-year fixed mortgage rates

A 5-year mortgage term is the most popular 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. It also tends to be heavily promoted by major lenders. A further breakdown of mortgage terms shows that about 80% of mortgages have terms of five years or less.

Fixed rates are by far the most common - in 2023, from January to December, almost 95% of mortgage rate inquiries made to Ratehub.ca were for fixed rates. Moreover, according to the 2024 CMHC Mortgage Consumer Survey, 69% of all mortgages contracted in 2024 were for fixed-rate mortgages. The table below, sourced from the same survey, shows the popularity of fixed-rate mortgages in 2024 among the four main categories of people who contracted mortgages. 

What drives changes in 5-year fixed mortgage rates?

By and large, 5-year fixed mortgage rates follow 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.

References and Notes

1. Trends in the Canadian Mortgage Market: Before and During COVID-19, Statistics Canada, 2021
2. Annual State of the Residential Housing Market in Canada, Mortgage Professionals Canada, 2021
3. Housing Market Report: 2022 Year-End Consumer Survey and Outlook, Mortgage Professionals Canada, 2023

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