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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. Insights: Upward pressure persists on fixed mortgage rates as bond yields remain elevated in the 3.7% range. 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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WATCH: April 10, 2024 Bank of Canada announcement

5-year variable rates: Frequently asked questions

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

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

Will variable mortgage rates go down in 2024?

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

Is it worth getting a variable-rate mortgage?

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

What is Canadian Lender and Big 6 Bank?

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

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April 2024: Mortgage market update

After a bumpy start to 2024 for the Canadian housing market, we are seeing preliminary indicators that sales activity will gather pace, improving as expectations grow for a rate cut from the Bank of Canada as early as the summer. Bond yields continue to be on a roller coaster ride, as a jumpy bond market reacts to various data reports from Canada, the United States, and beyond. After a brief respite in December and January where bond yields tumbled, they’ve now risen to the 3.7% range in large part due to nervous investors spooked by the US Federal Reserve’s “higher for longer” rate stance. Both fixed and variable mortgage rates are currently historically high. If you’re looking to get a mortgage rate in Canada, read on for some economic information you should know.

  • Real estate update: On April 12, 2024, the Canadian Real Estate Association (CREA) came out with the latest housing market figures for the month of March 2024. The most recent numbers show that the Canadian housing market is currently somewhat flat, although optimism linked to hopes of rate cuts later this year are expected to boost demand during the spring. Per CREA, a total of 42,633 homes changed hands across Canada, marking an annual increase of just 1.7%, and only 0.5% more than in February. New listings dipped on a monthly basis by -1.6%, which in turn caused the sales-to-new-listings ratio (SNLR) to tighten to 57.4%. CREA uses the SNLR to gauge competition in the marketplace, with 45-65% indicating a balanced market, with above and below that range indicating sellers’ and buyers’ markets, respectively. In the bigger picture, however, the supply of new listings continues to recover from the record lows seen in 2023; the 76,021 residential properties that came to market in March represent a 10% annual increase. Still, this new supply was not enough to prevent price growth – the average home price in Canada rose by 2% to $698,520.

    Read mo
    re: Canadian home sales were flat in March, but rate cut boost expected

  • CPI update: The latest Consumer Price Index (CPI) reading from Statistics Canada for the month of March saw headline inflation come in at 2.9%, 0.1% above the previous month’s reading. The increase was propelled largely by year-over-year gas price increases, as well as a 6.5% annual increase for shelter costs, which include mortgage interest costs as well as rents. The latter was the single largest contributor to the March CPI figure. It’s not all bad news, though - food inflation continues to decline, with just a 1.9% annual rise. Most importantly from the Bank of Canada’s perspective, both “core” median and trim inflation have fallen to 2.8% and 3.1%, respectively. These particular metrics are a key driver behind the Bank’s rate decisions. While the central bank would like to see both of these metrics below the 3% mark, this report suggests that rate cuts could come as early as June. However, we will see April’s CPI report before the Bank’s next rate announcement on June 5, 2024, which may affect how the Bank chooses to proceed.

Read more: Canadian CPI comes in at 2.9% in March

2024 Housing market forecast

Taking into consideration expectations of rate cuts and bottled-up buyer demand, CREA has updated its forecast for 2024 and 2025. 

The organization projects that some 492,083 residential properties will change hands in 2024, representing a 10.5% increase from 2023. Growth is predicted to be strongest in areas where demand for homes has remained consistently robust, such as Alberta. Nevertheless, even markets that have suffered from historically low sales, among them Ontario, British Columbia and Nova Scotia, will also experience increased housing market activity. Unsurprisingly, the average home price in Canada is predicted to climb by 4.9% to $710,468 in 2024.

2025 is expected to see activity rebound even further, with a prediction that some 530,494 homes will sell by the end of the year (an annual increase of 7.8%). The average home price in Canada is projected to rise by 7% to $760,120.

April 10, 2024 Bank of Canada announcement update

On April 10, 2024, the Bank of Canada held its target for the overnight rate unchanged at 5.00%.

  • Multiple factors justified the Bank’s sixth consecutive rate hold, including stalled economic growth and weakening labour market conditions.
  • While the Bank’s commentary highlighted significant progress made in the fight against runaway inflation, it nonetheless noted that February’s CPI reading of 2.8% remained above its target of 2%. In consequence, the Bank reaffirmed that higher rates were needed for longer in order to get inflation down to where it needs to be.
  • Canadians with variable-rate mortgages and home equity lines of credit (HELOC) will need to stay patient, as the Bank has not moved up its timing for potential rate cuts.
  • While fixed mortgage rates are not tied directly to the Bank of Canada’s rate decisions, but rather to the bond market, the Bank’s commentary can still incite bond yields to rise or fall. With this rate hold largely anticipated, however, the bond market has reacted minimally. As such, we can expect lenders to keep their fixed mortgage rates where they are for the near future.
  • Anyone shopping for a home or whose mortgage is up for renewal should obtain a rate hold to protect themselves from any unexpected rate rises. 
  • This announcement is unlikely to have any effect on home prices. Home buyers and sellers have already come out in force in anticipation of rate cuts in the latter half of this year and into 2025, and the Bank’s commentary made it clear that they will come no sooner than that.


Best 5-year variable mortgage rates +

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 from January - December 2023 were for 5-year variable-rate mortgages.
  • 5-year fixed mortgage rates are driven by 5-year government bond yields.
  • 25% of all Canadian mortgage-holders had a variable-rate mortgage as of the end of 2022 (Source: Mortgage Professionals Canada)

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 in 2022 were for 5-year variable rates, they accounted for just shy of 5% of all rate requests to Ratehub in January - September 2023. 

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. 

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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.


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