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5-year variable mortgage rates in Canada
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WATCH: March 8, 2023 Bank of Canada Announcement
5-year variable rates: Frequently asked questions
What is the best 5-year variable mortgage rate in Canada?
As of March 9, 2023, the best high-ratio, 5-year variable rate in Canada was 5.55%. 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 here 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.
How much did variable rates increase in 2022?
On January 1, 2022 the best high-ratio, 5-year variable rate in Canada was 0.85%. As of January 1, 2023, the best high-ratio, 5-year variable rate in Canada was 5.30%.
Over the course of 2022, variable mortgage rates in Canada went up a total of 4.45%, which represents an increase of over 520%.
Why did variable rates go up so much in 2022?
Variable rates are directly tied to a lender’s prime rate. Lenders set their prime rates based on the Bank of Canada’s target for the overnight rate (also known as the policy or benchmark interest rate in Canada).
In March 2020, the Bank of Canada slashed the target for the overnight rate multiple times in response to the COVID-19 pandemic. It maintained the policy interest rate at the lower bound of 0.25% until March 2, 2022 - a historic low.
Between March 2, 2022, and January 25, 2023, the Bank of Canada increased the target for the overnight rate a historic total of eight times in an effort to combat rising inflation. As a result, the prime rates of most lenders also increased.
Because variable rates are actually calculated as a discount from the prime rate, as prime rates rose in 2022, so did variable rates.
Should I switch my variable-rate mortgage to a fixed-rate mortgage because the prime rate keeps increasing?
You may be thinking about locking in a fixed rate because the prime rate increased throughout 2022 and your variable rate has moved higher. However, it’s important to note that fixed rates have been increasing significantly as well. Therefore, you have to choose between a variable or fixed rate based on the current rate environment and your decision should come down to your appetite for risk and your household finances.
The Bank of Canada has indicated that it will hold its Overnight Lending Rate at 4.50% for the foreseeable future, assuming inflation does not trend any higher.
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.
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.
What impact do rising variable rates have on the stress test?
As mortgage rates continue to rise, the mortgage stress test will continue to go up as well.
Mortgages in Canada are currently stress tested based on the higher of:
- the qualifying rate (currently 5.25%), or
- your contract rate + 2%
As of March 9, 2023, the lowest 5-year variable rate available in Canada is 5.55% and the lowest 5-year fixed rate in Canada is 4.69%. 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%.
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.
Will variable rates continue to go up in 2023?
On March 8, 2023, the Bank of Canada held the target for the overnight lending rate for the first time since it began its rate hiking cycle back in March 2022. The benchmark cost of borrowing remains at 4.50%. That’s still the highest this rate has been since 2007, but borrowers can breathe a sigh of relief that rates have not climbed further.
The Bank expressed optimism in its most recent announcement that it believes core inflation in Canada has peaked and is now declining in response to the aggressive measures it took over most of 2022 and into January 2023, and that it will now hold rates into the foreseeable future, as long as economic factors evolve as expected. This means variable mortgage borrowers can anticipate interest rates to stabilize for the remainder of 2023, as long as inflation continues to trend downward.
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
March 8, 2023 Bank of Canada Announcement Update:
- On March 8, 2023, the Bank of Canada held the target for the overnight rate. The target for the overnight rate remains 4.50%.
- Canadians with variable-rate mortgages and home equity lines of credit (HELOCs) will see their rates stay stable for the first time in a year.
- With rates remaining unchanged, the threshold for the mortgage stress test remains the same. To calculate how much you can qualify for, use our mortgage affordability calculator.
- The Bank of Canada had raised this rate, which lenders in turn use to set their Prime rate and variable-rate mortgage products, eight times since March 2022, increasing the target for the Overnight Rate by 425 basis points, from 0.25% to 4.50%. This was the fastest rate-hiking pace seen since the late 1970s.
- The Bank expressed its belief that the aggressive measures it has been taking to control inflation appear to be effective, and anticipated that the Consumer Price Index will lower to 3% by the middle of 2023. As long as inflation continues to abate, the Bank is expected to end its rate hike cycle for the remainder of this year. Should this prove to be true, it will allow for the housing market to stabilize, leading to better borrowing options in 2023 as conditions become more predictable.
Best 5-year variable mortgage rates +
Rates updated:
Rate | Term | Type | Provider |
---|---|---|---|
5.55% | 5 years | Variable | Canadian Lender |
5.70% | 5 years | Variable | CanWise |
5.80% | 5 years | Variable | First National |
5.80% | 5 years | Variable | Equitable Bank |
5.80% | 5 years | Variable | CMLS Financial |
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".
- Just over 25% of all mortgage requests made to Ratehub.ca in 2022 were for 5-year variable-rate mortgages.
- 5-year fixed mortgage rates are driven by 5-year government bond yields.
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, some 33% of all mortgages in Canada were variable-rate mortgages in 2022 (Source: BNN), making it the second most popular type of mortgage. Fixed rates are slightly more common for the youngest age groups, while older age groups are more likely to opt for variable rates (Source: CAAMP).
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, a third of all mortgages in Canada in 2022 were variable-rate mortgages, in contrast to 20% in 2019. However, as variable-rate mortgages have climbed to rates nearly on par with (and sometimes higher than) fixed-rate mortgages in the wake of multiple Bank of Canada rate hikes over the course of 2022, their popularity has waned recently.
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.
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.
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!
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