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Jamie David, Director of Marketing & Mortgages
As one of Canada's most populated cities (number 7, for those keeping score) Winnipeg is an important city with a thriving real estate and mortgage market. That's good news for current and future homeowners, as there exists a range of mortgage products and providers to choose from.
Of course, with all the different products on offer, figuring out the best mortgage for you can be difficult. A great place to start is with 5-year fixed mortgages, the most common type of mortgage in Winnipeg.
Ratehub.ca makes it easy to compare rates from the biggest banks, brokers, and other mortgage providers in Winnipeg, at no cost to you. Read on to learn more about comparing 5-year fixed rates in Winnipeg.
Best mortgage rates in Winnipeg +
5-year fixed mortgage rates: Quick facts
- Mortgage rate is fixed over a 5-year term
- 69% of all Manitoba mortgage requests made to Ratehub.ca in 2021 were for 5-year fixed-rate mortgages
- 72% of Canadians had fixed mortgage rates in 2020 (Source: Mortgage Professionals Canada)
- 5-year mortgage rates are driven by 5-year government bond yields
Historical 5-year fixed mortgage rates in Winnipeg
Whether you decide to go with a fixed or variable rate largely depends on the current interest rate environment. If rates are currently low, a fixed rate can lock that rate in for several years. However, if rates are high and likely to fall soon, a variable rate can help you benefit from that rate drop.
Looking at historical mortgage rates is the best way to understand whether rates are currently high or low. Below are the lowest 5-year fixed 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 fixed mortgage rates in Winnipeg
Fixed rates are by far the most common rate type in Winnipeg and the rest of Manitoba. While variable rates have tended to be historically cheaper over the long term, fixed rates ensure a consistent mortgage payment for your entire term, which is an attractive prospect for many homeowners.
As for mortgage terms, 5 years is the most common duration. Mortgage terms are available from between 6 months and 10 years in Winnipeg, so 5 years is a sort of middle ground that balances consistency with flexibility.
It's worth remembering that just because fixed rates and 5-year mortgage terms are popular mortgage options in Winnipeg, it doesn't necessarily mean they'll be a good fit for you. Everyone is different, and you need to weigh up your options carefully. Use the tools at the top of this page to compare mortgage products from multiple providers to get a better understanding of what's available to you.
What drives changes in 5-year fixed mortgage rates?
By and large, 5-year fixed mortgage rates follow the pattern of 5-year Canada Bond Yields, plus a spread. Bond yields are driven by economic factors such as unemployment, export, and inflation.
When Canada Bond Yields rise, sourcing capital to fund mortgages becomes more costly for mortgage lenders and their profit is reduced unless they raise mortgage rates. The reverse is true when market conditions are good.
In terms of the spread between the mortgage rates and the bond yields, mortgage lenders set this based on their desired market share, competition, marketing strategy, and general credit market conditions.
5-Year Fixed Rates vs. 5-Year Bond Yields
From 2000 - Today
Should you get a 5-year mortgage in Winnipeg?
As with most things in the mortgage business, it depends. While 5-year rates are popular and generally come with some of the lowest mortgage rates available, there are many reasons why you might not want to get a 5-year mortgage.
For example, if you think rates will go up in the coming years, it might be a good idea to lock in today's rates for longer with a 10-year mortgage. Alternatively, you might need the flexibility that comes with a shorter mortgage term, such as a 3-year or 2-year mortgage.
If you're finding this all a bit confusing, don't worry - you're not alone! Speaking to a mortgage broker or using Ratehub.ca to compare quotes from multiple lenders, can help you better understand your options. That's the first step in making the right choice.
References and Notes
- Trends in the Canadian Mortgage Market: Before and During COVID-19, Statistics Canada, 2021
- Annual State of the Residential Housing Market in Canada, Mortgage Professionals Canada, 2021
For more information, check out these helpful pages!
What are 5-year fixed mortgage rates?
The '5' in a 5-year mortgage rate represents the term of the mortgage, not to be confused with the amortization period. The term is the length of time you lock in the current mortgage rate, while the amortization period is the amount of time it will take you to pay off your mortgage. The term acts like a reset button on your mortgage, at which point you must renew the mortgage at a rate available at the end of the term. So, for example, a typical mortgage has a 5-year term and a 25-year amortization period.
When the mortgage rate is 'fixed' it means that the rate (%) is set for the duration of the term, whereas with a variable mortgage rate, the rate fluctuates with the market interest rate, known as the 'prime rate'. So, for example, if the 5-year fixed mortgage rate is 4%, then you will pay 4% interest throughout the term of the mortgage.
An interesting feature of the 5-year fixed mortgage rate is that all borrowers must meet its standards of approval even if they choose a mortgage with a lower interest rate and shorter term. This benchmark is applied not only to reduce risk for the lender, but to give the borrower some breathing room.
How much can I save comparing 5-year fixed rates?
Your mortgage is likely to be the largest financial commitment you’ll ever make, and getting a better rate can save you thousands over a 5-year term. Even a slightly lower mortgage rate can result in big savings, especially early on in your mortgage.
For example, on a $500,000 mortgage with a 25-year amortization period, a rate of 3.00% would see you pay $69,347 interest over 5 years. With a 2.75% rate you’d pay $63,454 interest over the term. So, a difference of just 0.25% can save you $5,893 over your 5-year term.
Why compare 5-year fixed rates with Ratehub.ca?
We make it simple to see current mortgage rates from all of Canada’s leading mortgage providers in one place. We have rates from the big banks, credit unions and smaller lenders across the country. This makes it easy to see who offers the best rates in Canada in real time, at no cost to you.
Why are fixed rates different to variable rates?
You can think of the difference, or spread, between variable mortgage rates and fixed rates as the price of insurance that mortgage costs will not increase in the next five years, more or less. The advantage of fixed-rate mortgages is that you know exactly how much your mortgage payments will be regardless of whether rates rise or fall. You can, essentially, set it and forget it. This eases the budgeting anxiety that may follow a variable rate mortgage.
When interest rates are low, and the spread between shorter-term rates and the 5-year fixed mortgage rates is less significant, it is typically recommended that you lock in the 5-year rate. The longer term offers stability and, because rates are historically low, the chances of rates decreasing further with a variable rate are greatly reduced.
On the other hand, as is the case with all fixed mortgage rates, there is the potential to pay higher interest when variable rates are low, and, examined historically, variable rates have proven to be less expensive over time.
Are 5-year mortgages better than other mortgage terms?
5-year mortgage terms aren’t necessarily better than other terms. You should pick a term length based on your financial needs and current situation, as well as what rates are on offer. However, 5-year terms offer a good compromise - they’re long enough to provide some stability, but short enough to not lock you in for a long time.
Jamie David is the Business Director of Mortgages at Ratehub.ca. A graduate of the Systems Design Engineering program at the University of Waterloo, she has over 15 years of business, marketing, and engineering experience in the financial technology, banking, education, energy and retail industries. She has worked in top organizations like TD Bank, Trading Pursuits, Petro-Canada, and the TTC. Her passion for personal finance, investing, education, and business strategy brought her to Ratehub.ca where she heads a very talented, cross-functional team that is dedicated to providing Canadians with the best mortgage experience all the way through from online search to (keys-in-your-hand) funded mortgage.read linkedin bio
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