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5-year variable mortgage rates in Canada

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ratehub.ca insights: The Bank of Canada held its benchmark rate at 2.25% in its December announcement. As a result, the prime rate used by Canadian lenders will remain at 4.45%. Variable rates are currently unchanged. Fixed mortgage rates have increased in recent days as bond yields have surged over 3%. Consider getting a pre-approval and rate hold 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 Ratehub.ca Exclusive	^$1,963
	Meridian Credit Union	^$1,981
	Canwise A Ratehub.ca Company	^$1,994
	Equitable Bank	^$2,015
	Big 6 Bank	^$2,024
	CMLS Financial	^$2,026
	First National	^$2,026
	Alterna Savings	^$2,036
	Scotiabank	^$2,047
	MCAP	^$2,068
	TD Bank	^$2,109
	Desjardins	^$2,111
	ICICI Bank Canada	^$2,176
	Bank of Montreal	^$2,194
	CIBC	^$2,068
	RBC Royal Bank	^$2,068
	Tangerine	^$2,079
	Simplii Financial ™	^$2,176
	National Bank of Canada	^$2,209

WATCH: October 29, 2025 Bank of Canada announcement

Frequently asked questions

Which lenders offer the lowest 5-year variable rates today?

As of December 10, 2025, the best high-ratio, 5-year variable rate in Canada was 3.45%. If you’re specifically comparing what the best variable mortgage rate in Canada is, visit our rate table to see the 5-year variable mortgage rates offered by Canada’s Big Banks and top lenders. For a personalized quote, enter basic details like your down payment, purchase price, and location, and get an accurate rate in under two minutes.

Will variable mortgage rates go down in 2025?

It is unlikely in the near term. The Bank of Canada lowered its overnight rate by 25 basis points in October 2025 to 2.25%, bringing the prime rate to 4.45% and reducing borrowing costs for variable-rate mortgage holders. As a result, the best five-year variable rate has dropped to 3.45%, down from 3.70% before the cut. In its announcement, the Bank signalled it will likely hold rates for the coming months, meaning variable rates are likely to stay stable rather than fall further.

When is a 5-year variable mortgage better than a 5-year fixed?

A 5-year variable mortgage is often better when rates are stable or expected to fall. As of October 2025, the Bank of Canada has lowered its policy rate to 2.25%, bringing the prime rate down to 4.45%. This has pushed variable mortgage rates below fixed options, with the best five-year variable around 3.45% compared to roughly 3.79% for the best five-year fixed. If that spread remains meaningful, variable borrowers could save more over time, especially if additional BoC cuts occur. That said, variable-rate mortgages come with payment risks. When the prime rate rises, your interest portion increases and, in extreme cases, can lead to hitting your trigger rate — the point at which payments no longer reduce your principal. If this continues, you risk negative amortization, meaning your principal balance grows instead of shrinking. Borrowers with fixed-payment variable mortgages should be aware of this risk. Before switching, assess the spread between your current and new rate, potential savings, and any penalties using Ratehub’s penalty calculator.

How to lock or convert a 5-year variable mortgage to a fixed rate?

You can usually convert your variable-rate mortgage to a fixed rate at any time, either with your current lender or by refinancing with a new one. The simplest option is an internal conversion, where your existing lender moves you to a fixed term (usually equal to or longer than what’s left on your current mortgage). No new approval is required, but you’ll get the lender’s posted or discounted fixed rate. If you want to switch to another lender’s fixed rate, you’ll need to refinance, which involves a full re-qualification that replaces your current mortgage with a new one. Refinancing may offer a lower rate, but you’ll face potential break penalties, legal costs, and new stress-test requirements. Before locking in, it’s important to weigh the rate spread between your current variable rate and the fixed rate you’d move to. If fixed rates are significantly higher, locking in could increase your payments. However, if market signals point to rising rates or if you’d prefer stable payments, converting can offer peace of mind.

Is now a good time for a variable rate mortgage?

Whether or not a variable-rate mortgage is right for you depends on your risk tolerance. Variable rates fluctuate with the Bank of Canada’s Overnight Lending Rate, meaning your interest rate and, in turn, your payments could increase if rates rise. For variable mortgage borrowers with fixed-payment schedules, rising rates could reduce the portion of payments going toward the principal, potentially leading to a trigger rate and negative amortization. That said, the rate environment has shifted since mid-2024. After a series of Bank of Canada cuts through 2024 and 2025, borrowing costs have eased, and variable rates are once again priced below many fixed options. The best five-year variable mortgage rate in Canada right now is 3.45%, slightly lower than the best fixed rate, which sits at 3.79%.

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

How does the Bank of Canada's rate affect variable mortgage rates?

Variable mortgage rates are directly correlated with the Bank of Canada’s overnight lending rate. When the Bank raises or lowers this policy rate, lenders adjust their prime rate — the benchmark used to price variable-rate mortgages. Variable rates are usually expressed as prime + a discount (for example, prime – 1.00%). So, when the Bank of Canada cuts its rate, the prime rate falls, and with that, variable mortgage rates decrease almost immediately. As of October 2025, the Bank’s overnight rate sits at 2.25%, and most lenders’ prime rate is 4.45%, down sharply from the peaks of 2023. This drop has led to lower variable mortgage rates in Canada, including the best 5-year variable rate on Ratehub.ca at 3.45%.

What is the stress test for a mortgage with a variable rate

The mortgage stress test ensures borrowers can handle their payments if rates increase. For variable-rate mortgages, borrowers must qualify at the higher of:

The Bank of Canada’s qualifying rate (currently 5.25%), or
Your contract rate + 2%.

As of October 29, 2025, the lowest 5-year variable rate in Canada is 3.45%. Since adding 2% to this rate (5.45%) exceeds the qualifying rate, most borrowers are stress tested at their contract rate + 2%.

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 10, 2025

If you’re just starting to explore Canadian mortgages, it’s normal to ask: What is a variable rate mortgage in Canada, and why does it fluctuate? A variable rate rises or falls with changes to the prime rate, which is directly influenced by the Bank of Canada’s overnight lending rate. Understanding this is especially helpful if you’re weighing fixed vs. variable, renewing your mortgage, or trying to decide whether you should lock in your variable rate mortgage. A clear grasp of how variable rates behave can make your next mortgage decision much easier.

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".
17.2% of all mortgage requests made to Ratehub.ca from January - November 2025 were for 5-year variable-rate mortgages.
25% of consumers opted for a variable-rate mortgage in 2025, up from 23% in 2024. (Source: 2025 CMHC Mortgage Consumer Survey)

2025 housing and mortgage market update

The housing market in Canada saw a rather quiet start to 2025, as buyers stayed on the sidelines. 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

Inflation update

Housing market forecast

October 29, 2025, Bank of Canada announcement update

On October 29, 2025, the Bank of Canada reduced its overnight rate by 25 basis points to 2.25%, the lowest level in more than three years.

The central bank said the decision was driven by signs of sluggish economic growth and stabilizing inflation pressures. The unemployment rate remained at 7.1% in September, and GDP contracted by 1.6% in the second quarter of the year due to tariffs. Inflation rose to 2.4% year-over-year in September, but the Bank believes the core measures show growth of around 2.5%, which it expects to ease within the Bank’s 2% target within the near term.
The cut will lower the prime rate to 4.45%, providing immediate relief for borrowers with variable-rate mortgages, HELOCs, and other credit products tied to prime. For mortgage holders, the best five-year variable rate is expected to fall from 3.70% to 3.45%, creating potential savings of just under $1,000 annually on a typical loan.
Fixed mortgage rates are also edging lower as bond yields decline, with the best five-year fixed currently at 3.79% on Ratehub.ca, a low not seen since Spring.
For savers and investors, today’s cut means lower returns on deposit products such as high-interest savings accounts and GICs. However, these products still remain relatively safe options in an uncertain market environment.
Looking ahead, further drops are unlikely as the Bank has indicated it will hold rates in future months.

Best 5-year variable mortgage rates

Rate	Term	Type	Provider
3.45%	5 years	Variable	Canadian Lender
3.54%	5 years	Variable	Meridian Credit Union
3.60%	5 years	Variable	Canwise
3.70%	5 years	Variable	Equitable Bank
3.74%	5 years	Variable	Big 6 Bank

How does a variable-rate mortgage work in Canada?

When you get a variable rate for a mortgage, your interest rate changes when your lender’s prime rate changes. The prime rate itself is influenced by the Bank of Canada’s overnight lending rate, which the Bank adjusts to control inflation and economic growth. When the Bank cuts its rate, your mortgage interest rate — and sometimes your payments, depending on your mortgage type — go down. When it raises rates, your costs go up.

There are two main types of variable-rate mortgages in Canada:

Adjustable-payment variable mortgage: Both your interest rate and payment amount change whenever the prime rate moves. Your amortization (time to pay off the loan) stays consistent.
Fixed-payment variable mortgage: Your payment stays the same even if the prime rate rises or falls. However, the amount that goes toward your principal versus interest shifts. If rates rise significantly, you could hit your trigger rate, where payments no longer cover the full interest owed — leading to negative amortization unless you increase payments or refinance. While rare, this phenomenon occurred in the latter half of 2023, when the Bank of Canada aggressively increased its benchmark rate.

Most variable-rate mortgages are quoted as prime plus or minus a discount (for example, prime – 1.00%). As of October 2025, with the prime rate at 4.45%, a discount of 1% would give you an effective rate of 3.45% — the best 5-year variable mortgage rate currently available on Ratehub.ca.

What drives changes in 5-year variable mortgage rates?

5-year variable mortgage rates change based on several key economic factors — most notably, the Bank of Canada’s overnight lending rate. When the Bank of Canada adjusts its policy rate, lenders typically follow by changing their prime rate within a few days. That directly affects how much borrowers pay on their variable-rate mortgages.

Here are the main factors that drive those changes:

Bank of Canada policy rate: The BoC raises or lowers its overnight rate to control inflation and stabilize the economy. When rates go up, variable mortgage rates increase; when they fall, borrowing costs drop.
Inflation: Rising inflation pushes the Bank to raise rates to cool spending. When inflation slows, the Bank can cut rates to stimulate growth.
Employment and economic growth: Strong job creation and higher consumer spending often lead to higher interest rates, while slower growth or higher unemployment typically prompts rate cuts.
Global events and market conditions: Trade disruptions, commodity prices, and international monetary policies can influence Canada’s economic outlook and, in turn, mortgage rate decisions.
Lender competition and funding costs: Each lender sets its own discount or premium to the prime rate (for example, prime – 1.00%). These adjustments depend on competition, funding costs, and risk appetite.

Because variable rates fluctuate with these factors, they can offer savings when the economy is stable or cooling, but they also carry the risk of higher payments when inflation or growth rebounds.

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Pros and cons of choosing a 5-year variable mortgage in Canada

A 5-year variable mortgage can offer meaningful savings and flexibility, but it requires comfort with uncertainty and changing payments. So if you’re wondering, “Should I lock in my variable rate mortgage in Canada?” here are some pros and cons to consider.

Pros

Lower initial rates and potential long-term savings: Variable mortgages are typically priced below fixed rates, currently around 3.45% vs. 3.79%, and can cost less overall if the Bank of Canada continues to ease policy.
Flexibility to convert to a fixed rate: Most lenders let you lock into a fixed term mid-way through your mortgage without breaking it, offering stability if market conditions shift.
Smaller penalties for breaking early: Variable-rate mortgages usually charge only three months’ interest if you refinance or sell, compared to the potentially high interest-rate differential (IRD) penalties tied to fixed loans.
Faster principal repayment in a falling-rate environment: When rates drop, a larger portion of each payment goes toward your principal, helping you build equity faster.
Historically lower total borrowing costs: Over long periods, variable rates have outperformed fixed rates about 80% of the time, according to multiple Canadian mortgage studies.

Cons

Exposure to rate volatility: Variable mortgages rise or fall with the prime rate, meaning your interest costs (and sometimes your payments) can change several times during your term. This unpredictability can make it harder to plan long-term budgets, especially if household income is fixed.
Trigger-rate risk on fixed-payment variables: If your payment doesn’t change when rates rise, more of it goes toward interest until you hit the trigger rate, where payments no longer cover the full interest.
Possible negative amortization: Once at the trigger point, unpaid interest gets added to your balance — your mortgage grows instead of shrinking until you increase payments or refinance.

How 5-year variable mortgage rates and their popularity have changed over time

Looking at historical mortgage data helps put today’s rates in perspective. The table below shows the lowest 5-year variable mortgage rates in Canada over recent years, alongside other popular terms. It highlights how rates that once sat below 1% in 2020 and 2021 surged past 5% by 2023 as the Bank of Canada raised its overnight rate to curb inflation. Since then, multiple rate cuts through 2024 and 2025 have gradually brought variable rates back down to the mid-3% range.

Source: Ratehub Historical Rate Chart

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; roughly 25% of all mortgages in Canada at the end of 2022 were variable-rate mortgages, in contrast to 20% in 2019.

But as borrowing costs spiked in 2022–2023, many borrowers shifted back to fixed terms for payment stability. As of 2025, fixed rates remain the most common, but variable products are regaining ground as rates fall. According to the 2025 CMHC Mortgage Consumer Survey, 25% of consumers opted for a variable-rate mortgage in 2025 (up from 23% in 2024). The table below, sourced from the same survey, shows the popularity of variable-rate mortgages in 2025 among the four main categories of people who contracted mortgages.

First-time home buyers	Repeat buyers	Renewers	Refinancers
25%	16%	24%	31%

See today’s best mortgage rates

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

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

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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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