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Best mortgage rates in Canada
To see the current best Canada mortgage rates from the Big 5 Banks, click on the "Best bank rates" tab.
WATCH: October 23, 2024 Bank of Canada announcement
Canada mortgage rates: Frequently asked questions
What is the best mortgage rate in Canada right now?
As of December 6, 2024, the best high-ratio, 5-year fixed mortgage rate in Canada is 4.14%, which is available across much of the country, including in Ontario, Quebec, British Columbia and Alberta.
As of December 6, 2024, the best high-ratio, 5-year variable mortgage rate in Canada is 4.85%, which is available across Canada, including Ontario, Quebec, British Columbia and Alberta.
As of September 5, 2024, the average 5-year fixed mortgage rate available from the Big 5 Banks is 4.74%. Rates from the Big 5 Banks currently range from 4.64% to 4.89%.
To find the best mortgage rates in Canada in 2024, use our rate table to compare the lowest mortgage rates currently offered by Canada’s Big Banks and top mortgage lenders.
Will interest rates in Canada continue to go down in 2024?
Could 2024 bring some much-desired mortgage rate relief? Canada’s borrowing costs have skyrocketed over the past two years; in 2022 alone, fixed mortgage rates more than doubled, while variable mortgage rates soared from their pandemic lows by over 500 basis points, following one of the steepest central bank rate-hiking cycles in history. This upward trend continued through 2023, with the Bank of Canada implementing another 75 basis points in rate hikes across three increases. As a result, the lowest five-year variable rate rose from 5.3% at the beginning of the year to 5.95% by December 2023. Fixed mortgage rates also climbed, driven by bond market reactions, increasing from 4.39% to 5.24% by the end of the year.
However, things are now starting to shift in favour of borrowers. The good news is that the Bank of Canada has clearly signalled that it no longer needs to raise rates to combat inflation. In its most recent rate announcement on October 23, 2024, the Bank implemented its fourth consecutive rate cut, reducing the Overnight Lending Rate by 0.5%, bringing it down to 3.75%. This brings the total reduction since June to 125 basis points. The CPI has dropped to 1.6%, below the Bank’s target of 2%, and inflation is declining in the U.S. and globally, reinforcing the Bank’s decision to cut rates.
As a result, Canada’s prime rate is expected to drop to 5.95%, which will lower borrowing costs for those with variable-rate mortgages and HELOCs.
Expert observers are predicting that, so long as inflation continues to stay in line with the Bank’s expectations, another rate cut is highly likely at the Bank’s next rate announcement in December, 2024. Should that materialize, the nation’s prime rate will fall once again, as will variable mortgage rates.
While fixed mortgage rates are not directly influenced by the BoC’s rate decisions, they are guided by the bond market, which responds sharply to investor sentiment. Bond investors react negatively to central bank rate hikes as they devalue their existing bonds. This, in turn, leads to bond sell-offs, which drive up yields – the funding floor lenders use when setting their fixed mortgage rate pricing.
In fact, five-year government of Canada bond yields hit a 16-year high of 4.42% in October 2023, which drove fixed rates up dramatically in response. Since then, bond yields have been on something of a roller coaster ride as anxious investors react quickly to economic reports from Canada and overseas. More recently, bond yields have remained in the upper 2.9 - 3% range following the August 5th market event, and some lenders began reducing their fixed mortgage rates in the days leading up to the October announcement. In the wake of the Bank’s October 23 rate cut, bond yields are expected to fall further. Should the Bank decide to lower the target for the overnight rate again in December, we can expect a similar outcome, with bond yields falling, followed by reduced fixed mortgage rates.
It is thus reasonable to expect that both variable and fixed mortgage rates will likely fall further in the coming months.
What is the lowest mortgage rate in Canadian history?
According to Ratehub.ca’s historical mortgage rate database, the lowest five-year variable mortgage rate was 0.85%, in December 2021. The lowest five-year fixed mortgage rate was 1.39%, available in January and February of 2021. Rates were at record lows at this time as part of the Bank of Canada’s response to the pandemic; interest rates were slashed in the early months of 2020 as lockdowns slowed the economy. Doing so helped stabilize consumer demand, and prevented a credit crunch from lenders, ensuring the economy operated as smoothly as possible during this unprecedented event.
However, as those lockdowns eased and consumer demand rebounded amid ongoing pandemic-related supply chain issues, inflation has soared since the start of 2022, which prompted the central bank to dramatically increase its cost of borrowing from those early 2021 lows.
How does inflation affect mortgage rates in Canada?
To combat rising inflation, the Bank of Canada increases its target for the overnight lending rate (also known as the benchmark interest rate in Canada). This in turn makes it more expensive for consumers and businesses to borrow money and incentivizes savings. As a result of people spending less and saving more, demand in the market goes down, which then decreases the rate of inflation.
When the Bank of Canada increases its benchmark interest rate, banks and other mortgage lenders also increase their prime lending rates. Since variable mortgage rates are directly tied to a lender’s prime rate (in fact, variable mortgage rates are calculated as a discount from the prime rate), when the Bank of Canada hikes its key interest rate, variable mortgage rates consequently also go up.
Fixed mortgage rates, on the other hand, are not tied to the prime rate. Instead, they are directly related to five-year bond yields. As bond yields increase, the cost to lend money also increases. As a result, lenders raise their fixed mortgage rates.
In its most recent rate announcement on October 23, 2024, the Bank of Canada cut the target for the overnight rate by -0.50% – the fourth policy rate cut in a row between June and October. The Bank noted that September’s CPI of 1.6% was below the target of 2%, while inflation continued declining in the United States and elsewhere in the world. Some lenders had already begun reducing their fixed mortgage rates in the days leading up to the announcement, and more are now certain to follow. If inflation remains low, the Bank is likely to implement another rate cut in December, which will likely have a similar effect on the bond market, and, by extension, fixed mortgage rates.
How do I get the best mortgage rate in Canada in 2024?
Make sure you compare mortgage rates across the different banks, credit unions and top mortgage lenders in Canada. You can use our rate table above to compare the best mortgage rates in just a glance.
After comparing the different Canada mortgage rates currently available, you should then get a personalized quote to see which mortgage rate you can actually get given your situation. At Ratehub.ca, we can provide you a quote in just 2 minutes. To get a mortgage quote, enter some basic information (i.e. down payment amount, purchase price, location) so we can show you the lowest rate you can actually get.
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.
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Guide to Mortgage Rates in Canada
Jamie David, Sr. Director of Marketing and Mortgages
November 2024: Mortgage market update
The Canadian housing market has a relatively quiet summer season, as home buyers appear to be awaiting the effects of lower mortgage rates. Now that the Bank of Canada has implemented four cuts in a row, home sales have started picking up.
Variable mortgage rates have dipped in kind following the central bank’s October rate cut, and markets are largely anticipating another to come in December, which will put further downward pressure on rates.
However, from a historical perspective, variable and fixed mortgage rates remain elevated. If you're shopping for a mortgage rate in Canada right now, here are some economic factors you should be aware of.
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Real estate update: On November 15, 2024, the Canadian Real Estate Association (CREA) reported a significant surge in home sales for October, with 44,041 transactions — a 30% increase year-over-year and up 7.7% from September. This marked the highest sales activity since April 2022, as buyers responded to lower borrowing costs and a surge in new listings earlier this fall. So far in 2024, year-to-date sales are 5.6% higher than the same period in 2023. The national average home price rose 6% year-over-year to $696,166 in October. However, CREA’s MLS Home Price Index, which reflects the most typical homes sold, dipped slightly by 0.1% from September and 2.7% annually, suggesting that home price growth remains moderate. Despite the rise in sales, market conditions remain balanced, with 3.7 months of housing inventory, down from 4.1 months in September but still above a seller’s market threshold. New listings fell slightly in October, down 3.5% from September, but remained at their highest levels since mid-2022 due to a large increase in September. With the Bank of Canada expected to implement additional rate cuts in December and into 2025, buyer demand is anticipated to remain strong.
Read more: National home sales rise 30% in October
- CPI update: Statistics Canada’s latest Consumer Price Index (CPI) report, released on November 19, 2024, shows inflation climbed back to 2% in October, after hitting a low of 1.6% in September. This increase, while modest, reflects rising consumer costs, particularly in gas and food prices. Gas prices, which had dropped sharply by -10.7% in September, saw a smaller decline of -4% this month, driving overall price growth. On the housing front, shelter inflation showed signs of easing. Mortgage interest costs, which remain one of the largest contributors to inflation, declined for the second month, rising by 14.7% compared to 16.7% in September. This reflects the impact of four consecutive rate cuts implemented by the Bank of Canada, which reduced its benchmark Overnight Lending Rate to 3.75%. Despite the inflation rebound, analysts believe the Bank of Canada will proceed with another rate cut at the December 11 announcement, though it may be smaller than the 50-basis-point reduction seen in October. The upcoming GDP and jobs reports in late November will play a critical role in shaping the Bank of Canada’s December decision. For now, the latest CPI numbers suggest that while inflation pressures persist in some areas, the broader trend points to gradual easing, giving the central bank room to continue its focus on economic recovery.
November 2024 Fed rate cut announcement update
On November 7, 2024, the US Federal Reserve announced a quarter-point reduction in its benchmark interest rate, marking its second consecutive cut following a significant 50-point decrease in September. This decision aligns with the Fed's ongoing efforts to manage inflation, which has decreased from a peak of 9.1% in June 2022 to 2.4% in September.
The Fed's future rate-cutting path is uncertain, especially after the recent US Federal Election, as President Elect Donald Trump’s economic agenda could potentially reignite inflation. Fed Chair Jerome Powell indicated that policy decisions would be made on a meeting-by-meeting basis, focusing on employment and price stability.
The recent rate cut by the Federal Reserve has significant implications for Canadian borrowers. Following the Fed's announcement, bond yields in the U.S. have risen sharply. This trend also affects Canada, where the government of Canada's five-year bond yield recently climbed above 3%. This increase suggests that fixed mortgage rates in Canada are likely to rise, making borrowing more expensive for homeowners and potential buyers.
Looking ahead, both the Canadian and US economies face potential volatility due to political changes and economic policy uncertainties. 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
Highlights from the Bank of Canada’s October 23, 2024 announcement
At its seventh announcement of the year on October 23, 2024, the Bank of Canada lowered its Overnight Lending Rate by -0.50%, bringing it down to 3.75%. This is the fourth rate cut implemented by the central bank this year, following the -0.25% rate cuts of June, July, and September 2024.
- This cut is driven by falling inflation, with Canadian CPI down to 1.6%, below the Bank’s target of 2%, and concerns of a slowing economy, evidenced by weak GDP growth and declining GDP per capita.
- Borrowers with variable-rate mortgages or home equity lines of credit (HELOCs) will benefit, as the prime rate at most lenders will drop to 5.95%, reducing their payments or interest portions.
- Although fixed mortgage rates are tied to the bond market and are thus not directly impacted by the Bank of Canada’s rate cut, bond yields have already dropped into the 2.9% range as of the Bank’s announcement. Should yields continue to trend lower, borrowers can expect to see further discounts.
- Previous rate cuts in June, July, and September had a limited impact on housing demand, but with an additional 50-basis-point cut expected in December, more buyers may re-enter the market. New mortgage policy reforms set for December 15 could also increase activity in early 2025.
- The BoC is expected to cut rates further to reach its neutral rate of 2.25% to 3.25%, but there are concerns about moving too quickly, which could weaken the Canadian dollar and fuel inflation or trigger unsustainable housing price increases.
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
October 2024 mortgage affordability trends in Canada
The latest Home Affordability Report compiled by Ratehub.ca reveals that dropping mortgage rates have started to ease the financial strain on Canadian home buyers. According to the latest data, 12 of 13 major Canadian housing markets saw improved affordability, thanks to the first two Bank of Canada rate cuts implemented in June and July.
In August, the average five-year fixed mortgage rate fell to 5.16%, down from 5.29% in July, leading to a lower average mortgage stress test rate of 7.16%. This drop in rates, paired with softening home prices, notably in cities like Toronto, Victoria, and Vancouver, helped lower the required annual income to buy a home.
Toronto saw the greatest improvement, with required income falling by $4,850 to $204,100, and home prices in the city also dropped by $15,100 from July. Meanwhile, only St. John’s saw a slight worsening in affordability due to rising home prices.
The outlook for affordability continues to improve as additional rate cuts are expected from the Bank of Canada, with the next announcement set for October 23, 2024. Additionally, new mortgage rules, including an increase in the insured mortgage cap and extended amortization periods, will further benefit first-time buyers and fuel housing demand heading into the fall.
Read more: Dropping mortgage rates improved home affordability in August
Factors that can affect your mortgage rate in Canada
It’s important to understand that the best mortgage rate you qualify for may change depending on your unique borrowing profile. Here are some of the factors that influence what mortgage rate you qualify for:
The type of mortgage: If your mortgage is for a refinance, rather than a purchase or renewal, you’ll be eligible for higher rates. For individuals with an existing mortgage who have good credit and more than 20% equity in their homes, in addition to refinancing, you can also explore a home equity line of credit (HELOC).
Your down payment: If you’re purchasing a home and your down payment is less than 20% of the purchase price and the value of the home you are purchasing is less than $1 million, you’ll be required to purchase mortgage default insurance (sometimes known as CMHC insurance). This insurance is added to your mortgage amount and, while it will cost you money, it will result in a lower mortgage rate as your mortgage is less risky for your lender. If you’re renewing your mortgage, in order to be eligible for the lowest mortgage rates you would have needed to purchase CMHC insurance on the original mortgage.
Your intended use of the property: Your mortgage rate will be higher if you plan to rent your property out vs. live in it as your primary residence.
Your amortization period: Insurable mortgages (i.e. mortgages for homes valued at less than $1 million with a down payment of less than 20% of the purchase price) in Canada have a maximum amortization period of 25 years. Regardless of the price of your home, if you make a down payment of at least 20%, you are able to access a mortgage that allows a longer amortization period, such as a 30-year period. While longer amortization periods will usually result in a lower monthly payment, they can come with a slightly higher interest rate. Moreover, by taking longer to pay back the mortgage, you will pay more in interest overall than you would with a shorter amortization period.
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.
How to choose between a fixed or variable mortgage rate in Canada
Variable vs. fixed mortgage rates
The difference between fixed and variable mortgage rates is whether or not they will change over the term of your mortgage. Fixed rates will stay the same over the course of your mortgage term (usually 5 years), while variable rates will change alongside changes in your lender’s prime rate.
Fixed mortgage rates:
Fixed mortgage rates are a historically popular option, with 5-year fixed mortgage rates accounting for 80% of all mortgage requests made on Ratehub.ca from January to December 2023. Moreover, according to the 2024 CMHC Mortgage Consumer Survey, 69% of all mortgages contracted in 2024 were fixed-rate mortgages. The benefit of a fixed mortgage is that you are protected against interest rate fluctuations, so your regular payments stay constant over the duration of your term, regardless of what happens in the market. A fixed rate mortgage is ideal for you if you have a low appetite for risk. You’ll know how much you’ll be paying monthly right from the outset and not have to monitor interest rates.
Variable mortgage rates:
Variable mortgage rates are typically lower than fixed rates but can vary over the duration of your term. Variable mortgages are prone to market behaviour (via the prime rate) which affects your payments. That means your payment amounts can change over time. Variable rates remained substantially lower than fixed rates throughout 2021 and into 2022, leading a large number of buyers to opt for 5-year variable-rate mortgages. However, as variable-rate mortgages climbed to rates that are higher than fixed-rate mortgages over the course of ten rate hikes between March 2022 and July 2023, their popularity has substantially diminished. According to the 2024 CMHC Mortgage Consumer Survey, 23% of mortgages contracted during 2024 were variable-rate mortgages (down from 27% in 2023).
While variable rates are generally lower, they do fluctuate and can be viewed as more risky when compared to fixed rates. Moreover, variable rates have actually been higher than fixed rates since the end of 2022. That said, variable mortgage rates have some key advantages you should know about:
- You can convert a variable rate to a fixed rate at any time without a penalty as long as you stay with your original mortgage lender.
- Breaking a variable rate mortgage is substantially less expensive than breaking a fixed rate mortgage. To estimate the cost of breaking your mortgage, our mortgage penalty calculator is a useful tool.
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.
How to select the term for your mortgage rate
Choosing between a short-term mortgage or a long-term mortgage can also affect your interest rate. A short-term mortgage generally offers a lower rate, and, as it requires more frequent renewal, you can benefit from lower interest rates when you renew, if rates stay low at your renewal. Long-term mortgages, on the other hand, offer stability, as you won’t need to renew it often. However, long-term mortgage holders may not be able to take advantage of lower interest rates if the market fluctuates.
Open vs. closed mortgages
If you’re wondering whether to get an open or closed mortgage, the answer is, while an open mortgage may make sense in certain circumstances, the overwhelming majority of Canadians opt for a closed mortgage. While open mortgages have extra flexibility that you might need, closed mortgages are by far the more popular choice not only due to their lower rates, but also because most home buyers do not intend to pay off their mortgages in the short term. Moreover, fixed-rate open mortgages do not exist and variable-rate mortgages are very rare. The most common type of open mortgage is the Home Equity Line of Credit (HELOC). Below are some quick facts about the differences between open and closed mortgages, and you can also find more detailed information on our blog about open vs. closed mortgages.
Closed mortgages:
Closed mortgages have lower rates compared to open mortgages. Closed mortgages can come in fixed and variable form, but place restrictions on the amount of principal you can pay down each year. If you pay off the entire principal in a closed mortgage before the set term, you will face a prepayment penalty, which is normally a 3-month interest charge.
Open mortgages:
Open mortgages allow you to pay off your entire mortgage balance at any time throughout the term. The drawback is that you pay a premium for that option in the form of higher rates. You might opt for an open mortgage if you are planning to move in the near future, or if you’re expecting a lump sum of money through an inheritance or bonus that would allow you to pay more of your mortgage off.
How do I qualify for a mortgage in Canada?
While it’s important to think about qualifying for the best rates, you should also give some thought to the basics that you’ll need to qualify and get approved for your mortgage. To qualify for a mortgage, here are some of the most important things that prospective lenders will want to see.
A good credit score - You should have a credit score of 680 or higher to qualify for the best mortgage rates, but to qualify for a mortgage at all, you’ll need a credit score of at least 560. In addition to looking at your credit score, prospective lenders will also consider any derogatory information from your credit report, such as any missed payments (particularly if they have gone to collections). If you have bad credit, generally defined as a credit score of less than 660, you are unlikely to qualify for the best mortgage rates, and instead you’ll need to use a sub-prime mortgage lender like Equitable Bank or Home Trust. If your credit score is even less than 600, you will most probably need to use a private lender like WealthBridge. Sub-prime mortgage lenders are happy to work with people with a poor credit history, but they will charge higher mortgage rates. It's a good idea to have a detailed understanding of how your credit score affects your ability to obtain a mortgage.
Proof of income - You’ll also need to provide proof of income in the form of pay stubs and/or tax documents like your Notice of Assessment (NOA). Keep in mind that if you recently started a new job, even with proof of income, many lenders will want to see that you’ve held the position for at least a year.
How the stress test impacts mortgage qualification
In Canada, anyone applying for a new mortgage loan must pass the mortgage stress test. The purpose of the stress test is to ensure the borrower could still manage to make their mortgage payments in the case that interest rates rise over the course of their term. The criteria for the stress test is a benchmark rate of 5.25% or the borrower’s contract rate plus 2% – whichever is higher. For example, if your lender offers you a mortgage rate of 5%, you’ll need to prove you could afford to make your payments at 7% in order to pass the test and qualify for your mortgage loan.
The standards for the mortgage stress test are upheld by the Office of the Superintendent of Financial Institutions (OSFI), Canada’s federal banking regulator, for low-ratio, uninsured mortgages. The criteria for high-ratio and insured mortgages is governed by the federal Department of Finance, though they follow exactly the standards put in place by OSFI.
All mortgage borrowers must be stress tested, with two exceptions:
- Borrowers who are renewing their mortgage term at their original lender often are not re-stress tested.
- Borrowers with high-ratio, insured mortgages switching to another lender at renewal may not be stress tested, as long as the original terms of their loan and amortization do not change.
Read more about Canada’s mortgage stress test:
Historical Canada mortgage rates
Looking at historical mortgage rates in Canada is a good way to understand which types of mortgage attract higher rates. They also make it easier to understand whether we’re currently in a low or higher rate environment, relatively speaking.
Here are some of the lowest Canada mortgage rates of the year for different types of mortgages over the past five years.
Source: Ratehub Historical Rate Chart
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Is it worth working with a mortgage broker?
First, what exactly is a mortgage broker? Independent mortgage brokers are licensed mortgage specialists who have access to multiple lenders and mortgage rates. They essentially negotiate the lowest rate for you, and because they acquire high quantities of mortgage products, mortgage brokers can pass volume discounts directly to you. There are advantages to getting a mortgage directly from a lender as well as getting a mortgage through a broker, but there are differences between going with a bank vs. a mortgage broker. While going directly to your current bank lets you consolidate your financial products, using a broker allows you to shop around quickly and easily, at no cost to you.
Luckily, you don’t need to choose one or the other. You can speak to multiple banks and use a mortgage broker if you want to. Ratehub.ca is a great place to start, as we compare the best mortgage rates in Canada from multiple lenders. Once you’ve compared your options, we can put you in contact with your chosen provider.