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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: There was no upward movement for fixed rates overnight, but they remain under heavy pressure to increase as yields are elevated above the 4.2% range. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days. Variable rates are unchanged.

As of:


Canadian Lender



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CMLS Financial


First National


Equitable Bank


ICICI Bank Canada


WATCH: September 6, 2023 Bank of Canada announcement


5-year variable rates: Frequently asked questions

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

How much have variable rates increased so far in 2023?

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

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

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

Will variable rates continue to go up in 2023?

What is Canadian Lender and Big 6 Bank?

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

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A guide to 5-year variable mortgage rates

Jamie David

September 2023 mortgage market update

The Canadian mortgage market has been characterized by significant volatility of late, and September 2023 is proving to be no exception so far. Historically high bond yields are placing substantial upward pressure on fixed mortgage rates. Meanwhile, the Bank of Canada’s two consecutive rate hikes in June and July, which brought the target for the overnight rate to 5%, have left variable mortgage rates elevated as well. If you’re looking to get a mortgage in Canada, here’s what you need to know:

CPI update: The Bank of Canada watches inflation like a hawk, as it is the main economic metric that guides its monetary policy. To try to control inflation, the Bank uses its policy rate, also known as the target Overnight Lending Rate or benchmark rate. During periods when inflation is running hot, as it has been since pandemic-related lockdowns came to an end in 2021, the Bank raises its policy rate to increase the cost of borrowing. This in turn has the effect of cooling consumer spending and borrowing behaviour. In contrast, when the economy is sluggish, the Bank lowers the policy rate to encourage borrowing and spending.

The most recent Canadian consumer price index (CPI) figures from August came in substantially above expectations at 4%, outstripping July’s too-high reading of 3.3%. According to Statistics Canada, rising gasoline prices are responsible for much of the uptick, along with soaring shelter costs as rental homes become ever more expensive. Food costs also went up by 6.9%, though this was down from the previous month’s 8.5%. The single biggest contributor to rising inflation continues to be mortgage costs, which rose 0.3% on a monthly basis to 30.9% in August.

In light of this latest figure, it’s difficult to say whether the Bank of Canada will effect another rate hike at its upcoming October 25 announcement. September’s CPI figures, which will be published before then, will certainly have a major impact on the Bank’s decision.

Read more: August inflation hits 4%, increasing chance of October rate hike

Bond market update: The aforementioned inflation data has sent Government of Canada bond yields soaring, sending them to 4.15% on August 15 (a level not seen since 2007) and keeping them above the 4% mark. As fixed mortgage rates are directly tied to the bond market rather than the Bank of Canada’s policy rate, with bond yields remaining above the 4% mark for any appreciable period of time, we are seeing powerful upward pressure on fixed mortgage rates. The bond market is likely to exhibit further volatility in the coming weeks, as a number of key economic indicators, like the job numbers report and September’s CPI report, will be published before the Bank of Canada’s October 25 rate announcement.

Real estate update: August saw a marked slowdown for the Canadian real estate market, with some 40,257 residential properties sold. This figure represents an annual increase of 5.3%, but a monthly decline of -4.1%.

Canadian home prices remain on the rise, but the pace has slackened; August’s Canadian average home price came in at $650,140, representing a year-over-year increase of 2.2%, but down by an eye-popping -20% from the February 2022 pandemic-era price peak. The MLS Home Price Index rose slightly by 0.4% on both an annual and a monthly basis.

According to the Canadian Real Estate Association (CREA), buyer appetite has decreased the most in Greater Vancouver and the Fraser Valley, followed by Montreal, Ottawa, Hamilton-Burlington, London and St. Thomas.

Read more: August market returned to “better balance” due to improved listings

September 6, 2023 Bank of Canada announcement update

On September 6, 2023, the Bank of Canada held its target for the overnight rate steady at 5.00%.

  • Several key data points used by the Bank of Canada when determining how to move forward supported a rate hold, including soft Q2 GDP numbers, a slow-down in consumer spending, a softening housing market and increased slack in the labour market. However, inflation itself remains stubbornly above the Bank’s 2% target. In its accompanying commentary, the Bank reaffirmed its commitment to tamping inflation down to 2%, and clearly stated that it would effect further rate hikes if deemed necessary.
  • As the Bank has made it clear that rate hikes are not off the table, Canadians should budget accordingly.
  • This rate hold will be welcome news for Canadians with variable-rate mortgages, home equity lines of credit (HELOCs) and for anyone looking to get a mortgage in the fall (whether variable or fixed).
  • Fall data will show us whether this rate hold is enough to incite Canadians to go out and start house-hunting, or whether the current rate environment is so high that even with a rate hold, would-be home buyers remain on the sidelines.



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".
  • Just 5% of all mortgage requests made to from January - April 2023 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, a Bank of Canada report showed that some 33% of all mortgages in Canada were 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 massive surge in popularity; as mentioned above, roughly a third 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 5% of all rate requests to Ratehub in January - April 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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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.


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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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