Find the best mortgage rates in Canada

Highlights from the Bank of Canada’s January 28, 2026 announcement

On January 28, 2026, the Bank of Canada held its overnight interest rate at 2.25%, marking its second straight pause since December. 

• The decision was expected, as the Bank has said in recent announcements that the current rate level is appropriate for the economy. Inflation data is also giving the Bank room to stay on hold. December’s inflation rate rose to 2.4% from 2.2% in November, but core inflation measures — which the Bank watches more closely — continued to ease.
• As a result of this hold, lenders’ prime rates will remain unchanged at 4.45%, keeping variable borrowing costs steady. Interest rates, payments, and how much of each payment goes toward interest versus principal will all remain the same. For those shopping for a mortgage rate, the best variable rates are currently around 3.35%, the lowest levels since mid-2022, following nine rate cuts between June 2024 and October 2025.
• Fixed mortgage rates are also unlikely to fall much in the near term. Ongoing global uncertainty has kept bond yields elevated, which limits how much lenders can lower fixed rates. Canadian five-year bond yields have stayed around 2.8% since December, keeping the best insured five-year fixed mortgage rates near 3.84%. While this is well below the rates seen in 2023 and 2024, further declines appear unlikely for now.
• The Bank has hinted at a prolonged rate hold, which can offer only limited support to homebuyers. Lower borrowing costs may help some buyers, but confidence remains weak due to economic uncertainty and job security concerns, particularly in tariff-exposed industries. As a result, home sales in many major markets are expected to remain subdued until broader economic conditions improve.

January 2026: Mortgage market update

The Canadian housing market slowed in 2025 as buyers grappled with tariff concerns and economic volatility. After multiple rate cuts, the Bank of Canada implemented three rate holds in 2025, holding its benchmark rate stable at 2.75%. As the market shows early signs of recovery, mortgage shoppers should stay informed about the key factors influencing rates and affordability

• Real estate update: Canada’s housing market ended 2025 on a chilly note, with sales losing momentum heading into the final month of the year. According to the Canadian Real Estate Association (CREA), national home sales totalled 26,077 units in December, down 2.7% from November and 4.5% year over year, capping off what was a largely flat year for activity. For 2025 as a whole, 470,314 homes were sold nationwide, marking a 1.9% decline from 2024, as elevated economic uncertainty and delayed confidence kept many buyers on the sidelines despite falling interest rates and new policy support. Supply conditions eased modestly at year-end. New listings reached 133,495 at the end of 2025, up 7.4% from December 2024. With sales and new supply both cooling, the national sales-to-new-listings ratio (SNLR) edged down to 52.3%, compared to 52.7% in November, remaining firmly within CREA’s 45%–65% balanced-market range. Price growth remained muted under these balanced conditions. The national average home price came in at $673,335 in December, down 0.1% year over year, while the MLS® Home Price Index fell 0.3% from November and 4.0% annually. CREA noted that some of the month-over-month price decline likely reflected motivated sellers adjusting expectations ahead of the holidays. 
  
  
• CPI update: According to Statistics Canada, the Consumer Price Index (CPI) rose 2.4% year over year in December, up from 2.2% in November. The acceleration reflected the removal of last year’s GST/HST tax relief from the annual comparison, which pushed prices for previously exempt goods and services higher on a year-over-year basis. Offsetting some of the increase was a larger decline in gasoline prices, which fell 13.8% in December, compared with a 7.8% decline in November. Food prices continued to be a key pressure point. Grocery prices rose 5.0% year over year, despite being unchanged month to month. Restaurant prices climbed 8.5% annually, marking one of the largest contributors to the December increase. Shelter costs, on the other hand, showed signs of stabilization, with mortgage interest costs rising just 1.7% year over year, extending a multi-year deceleration. Rent inflation remained elevated, with Canadians paying 4.7% more year over year. Core inflation measures showed improvement. The CPI Median eased to 2.5%, while the CPI Trim declined to 2.7%, suggesting underlying price pressures continue to cool. Taken together, the December report reinforces expectations that the Bank of Canada is likely to maintain a rate hold rather than shift policy in the near term based on inflation alone.

Canada housing market forecast for 2026

Canada’s housing market is expected to regain momentum in 2026, according to CREA. Sales had already rebounded by 12% by August last year, and CREA believes lower interest rates, along with a growing pool of sidelined buyers, will help carry that recovery forward. National home sales are forecast to rise by 5.1% in 2026, reaching roughly 494,500 transactions. The strongest gains are expected in British Columbia and Ontario, where sales are projected to increase by about 8%, supported by higher inventory levels. In contrast, provinces that saw steadier demand throughout 2025 are expected to experience more modest improvements this year. Home prices are also expected to edge higher, with the national average forecast to rise 2.8% to $698,881. Price growth is likely to remain restrained in higher-cost markets such as Ontario and B.C., as well as in Alberta and Nova Scotia, where sales activity has cooled. Meanwhile, Saskatchewan, Quebec, and Newfoundland and Labrador are expected to continue seeing price gains. Looking further ahead, CREA expects the recovery to continue into 2027, with home sales rising another 3.5% and the national average price increasing by 2.3% to about $714,991. This would mark the seventh straight year that Canada’s average home price has hovered close to the $700,000 level.

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

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.

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:

• What changes are in store for Canada’s stress test?
• How to stress test your mortgage

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

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.