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5-year variable mortgage rates in Canada

To see mortgage rates for other terms and types, click on the filters icon beside down payment percentage.

ratehub.ca insights: Variable mortgage rates have fallen this week, following the 50 basis point cut implemented by the Bank of Canada on Wednesday. Bond yields, however, have increased to the 2.9% range, which could prevent any fixed-rate decreases in the short term. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days.

Transaction type

Rate type

Purchase price

Down payment $

Rate term

Amortization

Occupancy

Payment frequency

Rate	Provider	Payment
	Canadian Lender	^$2,154
	Big 6 Bank	^$2,187
	Canwise A Ratehub Company	^$2,187
	First National	^$2,209
	Alterna Savings	^$2,209
	CMLS Financial	^$2,209
	CIBC	^$2,220
	Desjardins	^$2,231
	MCAP	^$2,243
	Scotiabank	^$2,243
	Meridian Credit Union	^$2,263
	TD Bank	^$2,296
	Equitable Bank	^$2,310
	Bank of Montreal	^$2,321
	ICICI Bank Canada	^$2,401
	motusbank	^$2,412
	RBC Royal Bank	^$2,220
	Tangerine	^$2,276
	National Bank of Canada	^$2,287
	Simplii Financial ™	^$2,401

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WATCH: December 11, 2024 Bank of Canada announcement

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5-year variable rates: Frequently asked questions

What is the best 5-year variable mortgage rate in Canada?

As of December 13, 2024, the best high-ratio, 5-year variable rate in Canada was 4.35%. To see today's rates, visit our rate table to see the 5-year variable mortgage rates offered by Canada’s Big Banks and top lenders.

To get a personalized mortgage quote, click on the preceding link and enter some basic information (i.e. down payment amount, purchase price, location) so we can give you a more accurate quote within 2 minutes.

Why did variable rates go up so much in 2022 and 2023?

Variable mortgage rates are directly correlated with the Overnight Lending Rate set by the Bank of Canada, which in turn sets the benchmark for the Prime rate in Canada. The latter is then used by consumer lenders when setting the pricing of their variable mortgage rates.

The central bank increased the overnight lending rate seven times in 2022 and an additional three times in 2023, bringing the total to a historic 10 rate hikes – the steepest monetary policy tightening cycle in Canada’s history. In all, the increases brought the BoC’s rate from its pandemic-era low of 0.25%, to 5% in 2023. As a result, Canada’s prime rate rose to 7.2%.

As variable mortgage rates are calculated as a discount from the prime rate, lenders responded to these increases by raising variable mortgage rates in kind; according to Ratehub.ca’s historical rate database, the lowest five-year variable mortgage rate available in 2022 was 0.89%. In sharp contrast, that increased to 5.95% as of early 2024.

These rate hikes were in response to rampant inflation growth, which soared to a 40-year high of 8.1% in June 2022. This was mainly due to price increases as a result of the supply-chain challenges that had built up during the pandemic, as well as renewed consumer demand for dining, travel, and other services.

Will variable mortgage rates continue to go down in 2025?

Variable mortgage borrowers will be relieved to know that mortgage rates are continuing to fall. With the Bank of Canada having implemented a rate cut of -0.50% at its most recent announcement on December 11 – its fifth consecutive rate cut this year – Canada’s prime rate dropped from 6.7% to 5.45%. In consequence, the prime rates of most banks across the country and their variable mortgage rates fell almost immediately. While it’s impossible to predict rate direction with certainty, most market observers are predicting a few more rate cuts in 2025, barring any major economic surprises.

In its commentary released on December 11, 2024, the Bank of Canada’s Governing Council noted that inflation currently sits comfortably within its 2% target range and that economic growth remains subdued. While the central bank’s actions so far have supported the easing of borrowing costs, it also signaled a more cautious approach moving forward.

Future rate decisions will hinge on how key economic indicators — such as employment and inflation — evolve in the coming months, and the Bank indicated it would proceed “one announcement at a time” to ensure it maintains price stability and sustainable economic conditions. This means that while more rate cuts may still happen, they’re likely to be smaller, happen less often, and depend more on current economic trends. As a result, the future direction of variable mortgage rates will be more cautious and guided by ongoing data.

Should I switch my variable-rate mortgage to a fixed-rate mortgage if the prime rate increases?

While you may be considering locking into a fixed rate because your variable rate increased significantly in 2022 and 2023, it’s important to note that both variable and fixed rates have changed dramatically since then. Over the latter half of 2024, the Bank of Canada took steps to lower its benchmark interest rate, leading to a series of reductions. As a result, current mortgage rates—both fixed and variable—are now very different from what they were at the peak of rate hikes. Your decision ultimately comes down to your comfort with risk, financial stability, and how today’s available rates compare to your existing one.

The Bank of Canada most recently cut its target for the overnight rate by 0.50% on December 11, 2024, reducing it to 3.25%. This move was influenced by stable inflation readings and a slower economy. It will likely push the prime rate down to 5.45%, easing borrowing costs for variable-rate products.

Before switching your mortgage, the main thing to consider is the spread between your current variable rate and the best fixed or variable rate you can get today.

Read: Should you switch from a variable-rate to a fixed-rate mortgage?

If the spread between your current rate and the best rate you can get today is greater than the amount by which you believe the prime rate will increase for the rest of your mortgage term, then you may end up saving more by keeping your current variable rate.

If the discount to prime of the best variable rate you can get today is bigger than your current variable rate, then switching to a new variable rate may afford you more savings and provide a greater cushion against further rate increases.

If you believe that you can save more money by breaking your current variable rate, make sure to account for the cost of breaking your mortgage. You can use Ratehub’s penalty calculator to help you estimate this cost.

Lastly, if your biggest concern is the change to your monthly mortgage payments, there are some lenders who offer variable rates with “fixed” mortgage payments that do not change during the term. In such cases, when prime goes up, your monthly payment remains the same but the percentage of your payment that goes towards your principal decreases. This means that more of your payment goes towards paying the increased interest and ultimately it may take you longer to pay back your mortgage amount in full. That said, you should be aware that these types of mortgages are subject to hitting what is known as the trigger rate, wherein your payments are no longer going to the principal, and may not even be covering the costs of interest in full. Once this happens, you go into what’s called ‘negative amortization’, where you are actually losing equity that you’ve built up in your home. This can lead to you reaching your trigger point, where your payments are so much less than even the cost of interest on your mortgage loan that you need to increase them. Trigger points vary from lender to lender, and are spelled out in your mortgage contract.

Is it worth getting a variable-rate mortgage?

Whether or not a variable-rate mortgage is right for you depends on your risk tolerance as a borrower. Because variable-rate borrowing product rates are determined as either a plus or minus from the Prime rate, they fluctuate whenever the Bank of Canada makes a change to its trend-setting Overnight Lending Rate. This means it’s possible that a borrower would see their interest rate and their payment increase over the course of their mortgage term, should the Bank of Canada hike its rate during that time frame. As well, variable borrowers who have a fixed-payment schedule would see less of their payment go toward their principal mortgage loan in this scenario, which could put them at risk of hitting their trigger rate, and their mortgage negatively amortizing.

That said, the environment has shifted considerably in borrowers’ favor since mid-2024. By December 11, 2024, the Bank of Canada had implemented its fifth consecutive rate cut since June, reducing the Overnight Lending Rate to 3.25%. With inflation currently within target range and economic growth slowing, there’s room for further easing—though the Bank has suggested it may proceed more slowly and assess conditions one announcement at a time going into 2025. Even so, expectations remain that more modest cuts could follow if inflation and economic data remain supportive, further lowering variable mortgage rates over time.

Variable mortgage rate products also offer greater flexibility; unlike fixed-rate mortgages, which incur a hefty interest-rate-differential penalty when broken, a variable-rate mortgage term can be ended before renewal time for just three months’ of interest. Most mortgage lenders can also convert an existing variable rate into a fixed-rate option at the borrower’s request, without penalty.

Also read: Think mortgage rates will drop? The argument for getting a variable rate now

What impact do elevated variable rates have on the stress test?

Variable mortgage rates remain high from a historical perspective, which in turn increases the mortgage stress test threshold borrowers must prove they can pass when qualifying for a mortgage.

the qualifying rate (currently 5.25%), or
your contract rate + 2%

As of December 13, 2024, the lowest 5-year variable rate available in Canada is 4.35% and the lowest 5-year fixed rate in Canada is 4.14%. As such, both variable rates and fixed rates are now stress tested using your contract rate +2% as this will always end up being higher than the current qualifying rate of 5.25%. Today’s mortgage stress test starts in the 6.5 - 7.5% range for many borrowers.

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.

5-year variable rates vs. 5-year fixed rates

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A guide to 5-year variable mortgage rates

Jamie David, Sr. Director of Marketing and Mortgages

December 13, 2024

December 11, 2024 Bank of Canada announcement update

On December 11, 2024, the Bank of Canada (BoC) reduced its target for the Overnight Lending Rate by 0.5%, bringing it down to 3.25%. This marks the fifth consecutive rate cut since June 2024, with a total reduction of 175 basis points from the previous high of 5%. This is the second 50-basis-point cut in a row, following the October 2024 announcement.

The decision was influenced by weaker-than-expected economic performance, with Canada’s GDP growth slowing to 1% in the third quarter and unemployment rising to 6.8% in November.
The prime rate at most lenders will fall to 5.45%, resulting in lower monthly payments and reduced interest portions for borrowers with variable-rate mortgages and home equity lines of credit (HELOCs).
Fixed mortgage rates, though not directly tied to the Bank’s rate, may experience reductions as five-year bond yields have already dropped to 2.8%.
For homeowners nearing mortgage renewal in 2025, the rate cut offers an opportunity to secure lower renewal rates. By securing a rate hold now, borrowers can lock in the lowest rate they qualify for, protecting themselves from potential future rate increases during the renewal process.
The BoC signaled that it may take a slower pace with future rate cuts in 2025, as the policy rate is now significantly lower than in June 2024. Any further reductions will be assessed on a case-by-case basis.

November 2024: Mortgage market update

The housing market in Canada has seen a rather quiet year so far, as buyers are staying on the sidelines in anticipation of lower rates. With the Bank of Canada having implemented its fourth policy rate cut in 2024 and further cuts broadly expected, home sales have finally started to pick up.

Variable mortgage rates have fallen in proportion to the Bank of Canada’s 50-points October rate cut, and, with another rate cut anticipated in December, further downward pressure on rates is on the horizon.

Fixed rates are tied to bond yields, which have tumbled in the wake of the Bank of Canada’s rate cuts. As a result, fixed mortgage rates have decreased slightly as well.

Overall, though, when looked at from a historical perspective, both fixed and variable mortgage rates are currently elevated. Anyone shopping for a mortgage rate in Canada today should be aware of the economic factors below.

Real estate update: In the latest market data for October 2024, the Canadian Real Estate Association (CREA) reported a dramatic rebound in the housing market. A total of 44,041 houses were sold, marking a 30% increase compared to October 2023 and the highest activity since April 2022. This surge reflects the impact of four Bank of Canada rate cuts since June, including a notable 50-basis-point reduction in late October. The national average home price rose 6% year-over-year to $696,166, though the MLS Home Price Index, which captures typical market trends, showed prices have lowered 2.7% compared to the same period last year. While new listings decreased by 3.5% in October, the overall supply remains stable after September’s surge. The sales-to-new-listings ratio (SNLR) rose to 58% in October, up from 52% in September and exceeding the long-term average of 55%. CREA considers an SNLR between 45% and 65% as indicative of a balanced market. While conditions currently favor both buyers and sellers, a continued decline in new listings could tighten supply in the coming months, increasing competition. As further rate cuts are expected in December and 2025, CREA anticipates heightened activity in the coming months.

Read more: National home sales rise 30% in October
CPI update: The latest inflation data released by Statistics Canada on November 19, 2024 shows that the Consumer Price Index (CPI) rose to 2%, up from 1.6% in September, reflecting modest increases in consumer costs. This rise was driven largely by slower declines in gas prices (-4%) and higher food costs. While overall inflation saw an uptick, housing costs showed signs of moderation. Mortgage interest costs, a significant contributor to the CPI, grew by 14.7%, down from 16.7% in September, thanks to the Bank of Canada’s four consecutive interest rate cuts. Rent price growth also slowed, rising 7.3% compared to 8.2% the previous month, providing some relief to renters. Despite the inflation uptick, analysts expect the Bank of Canada to continue its rate-cutting path, with another reduction likely at the December 11 announcement. However, the pace may slow to 25 basis points as the central bank balances inflation with weak economic momentum. Upcoming GDP and employment data in late November will also play a critical role in shaping the Bank’s next moves. For now, the easing pressure in housing costs and broader inflation stabilization provide cautious optimism for borrowers and the economy alike.

Read more: Canadian inflation increases to 2% in October

What the November Fed rate cut means for Canadians

On November 7, 2024, the US Federal Reserve announced a quarter-point cut to its benchmark interest rate, marking its second consecutive reduction following a half-point cut in September. This decision aims to manage inflation, which has decreased from a peak of 9.1% in June 2022 to 2.4% in September.

The Fed’s future path for rate cuts has become less predictable, particularly in light of the recent US Federal Election. President Elect Donald Trump's economic proposals could potentially reignite inflation. He has also raised concerns about the Fed's independence in monetary policy decisions.

The latest rate cut is compounded by rising bond yields in the US, notably following Trump's victory. This trend extends to Canada, where the government of Canada's five-year bond yield recently rose above 3%, suggesting that fixed mortgage rates will increase, leading to higher borrowing costs for Canadian homeowners and potential buyers.

As both Canadian and US economies navigate potential volatility, borrowers are advised to prepare for fluctuating interest rates in the coming months.

Also read: US Federal Reserve cuts rate by 0.25% in November announcement

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

Best 5-year variable mortgage rates +

Rate	Term	Type	Provider
4.35%	5 years	Variable	Canadian Lender
4.50%	5 years	Variable	Big 6 Bank
4.50%	5 years	Variable	Canwise
4.60%	5 years	Variable	First National
4.60%	5 years	Variable	Alterna Savings

5-year variable mortgage rates: Quick facts

Variable mortgage rates fluctuate with the prime lending rate.
Variable rates are typically stated as "prime plus or minus a percentage".
Some 5.36% of all mortgage requests made to Ratehub.ca from January - December 2023 were for 5-year variable-rate mortgages.
5-year fixed mortgage rates are driven by 5-year government bond yields.
23% of consumers opted for a variable-rate mortgage in 2024, down from 27% in 2023. (Source: 2024 CMHC Mortgage Consumer Survey)

Historical 5-year variable mortgage rates

Checking historical mortgage rates is a great way to properly understand which mortgage terms attract lower rates and whether rates are especially high or low at any given moment. Here are the lowest 5-year variable 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 variable mortgage rates

Although fixed-rate mortgages are more popular, according to Mortgage Professionals Canada, 25% of Canadian mortgage-holders had variable-rate mortgages at the end of 2022, making it the second most popular type of mortgage.

Historically, fixed rates are generally more popular, however, in the wake of the COVID-19 pandemic, the Bank of Canada cut its target overnight lending rate in March 2020, which caused the prime rate to go down. As a result, variable-rate mortgages experienced a surge in popularity; as mentioned above, roughly 25% of all mortgages in Canada at the end of 2022 were variable-rate mortgages, in contrast to 20% in 2019. However, as variable-rate mortgages have climbed to rates significantly higher than fixed-rate mortgages in the wake of multiple Bank of Canada rate hikes over the course of 2022, their popularity has waned considerably in 2023. While some 26% of all rate inquiries to Ratehub.ca in 2022 were for 5-year variable rates, they accounted for just 5.36% of all rate requests to Ratehub in 2023. Moreover, according to the 2024 CMHC Mortgage Consumer Survey, 23% of consumers opted for a variable-rate mortgage in 2024 (down from 27% in 2023). 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.

First-time home buyers	Repeat buyers	Renewers	Refinancers
20%	21%	22%	28%

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.

What drives changes in 5-year variable mortgage rates?

As previously mentioned, the 5-year variable mortgage rate will fluctuate with any movements in the prime lending rate, which is the rate at which banks lend to their best and most credit-worthy customers. The variable mortgage rate is typically stated as prime plus/minus a percentage discount/premium.

Canada’s prime rate is influenced primarily by economic conditions. The Bank of Canada adjusts it depending on the state of the economy, determined by various factors in employment, manufacturing, and exports. Together, these shape the inflation rate. When inflation is high, the Bank of Canada must act to avert an over-stimulated economy. They will increase the prime rate to make the act of borrowing money more expensive.

Conversely, in cases where inflation is low, the Bank of Canada will decrease the prime rate to stimulate the economy and improve the attractiveness of borrowing. The discount/premium on the prime rate applied to the variable mortgage rate is set by the banks, based on their rate strategy and desired market share.

See today's best mortgage rates

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.

4.14%

Best fixed rate in Canada

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The bottom line: Should you get a 5-year variable rate?

As long as you're comfortable with risk and understand that variable rates can fluctuate throughout your term, then a 5-year variable rate is a reasonable choice. Since variable rates do have the inherent risk of rate increases, make sure you have enough money in your budget to cover a higher mortgage payment if rates increase.

If you're still not sure about what mortgage product is right for you, it's a good idea to speak to a mortgage broker. Consultations are free, and you'll leave with expert advice, personalized to you.

For more information, check out these helpful pages!

Ratehub.ca education centre

Buying
So you've made the decision to buy a new home! The first step is to figure out how much you can afford to spend.
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Renewing
If your current mortgage is up within four months, now's the time when most lenders will allow you to start the early mortgage renewal process.
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Refinancing
When deciding whether or not, you should refinance your current mortgage and replace it with a new one, there are a few important things to consider.
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