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Ontario mortgage rates: FAQ
Will mortgage rates rise in 2023?
Will mortgage rates decrease if inflation continues to fall?
What are the current mortgage rates in Ontario in 2023?
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What is today’s prime rate and how does it affect mortgage rates in Ontario in 2023?
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WATCH: April 12, 2023 Bank of Canada Announcement
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Getting the best mortgage rates in Ontario
Jamie David, Sr. Director of Marketing and Mortgages
Using our rate tables, you can compare today's best mortgage rates in Ontario from the Big 5 Banks, small banks, credit unions and top mortgage brokers, instantly, all in one place. Shopping around is critical if you want to find the best mortgage for your needs, and can save you thousands of dollars.
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Ontario at a glance
- Population: 14.83 million - most populous province in Canada, with just over 38% of the country’s population
- Average Household Income: $74,287
- Percentage of Homeowners: 70%
April 12, 2023: Bank of Canada Announcement Highlights
On April 12, 2023, the Bank of Canada held the target for the overnight rate for the second time in a row, keeping it at 4.5%.
- Canadians with variable-rate mortgages and home equity lines of credit will see their rates remain unchanged, which is sure to be a welcome relief after the eight successive rate hikes carried out by the Bank of Canada between March 2, 2022 and January 25, 2023.
- Canadians who have fixed-rate mortgages won't be significantly affected by this announcement, as the fixed cost of borrowing is not directly impacted by the Bank of Canada, and this rate hold was aligned with market expectations. However, they can likely expect lower or stabilized rates upon renewal at the end of their current term.
- Anyone currently looking to get a fixed-rate mortgage in the next few months should still get pre-approved to protect themselves from any unexpected rate increases while ensuring access to the best rates when they are ready to apply.
- With variable rates remaining unchanged, the mortgage stress test criteria also remains the same. To see how much you can qualify for, use our mortgage affordability calculator.
- In its April 12 announcement, the Bank provided detailed commentary illustrating their belief that the measures carried out to control inflation are working, and expect that inflation will fall to 3% by the middle of 2023. So long as this holds true, we can expect to see no further rate hikes for the remainder of the year. That said, it's notable that there was also no mention of a rate cut at all in the Bank's commentary, so variable and HELOC rates can be expected to remain at their current elevated levels for the foreseeable future.
Ontario housing market: May 2023 update
The Ontario real estate market continues to lag last year’s activity; according to data released by the Canadian Real Estate Association (CREA) on May 15, 2023 for the month of April, sales in the province are down by -13.1% year over year, with a total of 17,306 transactions. That’s also keeping the Ontario average home price below where it stood in 2022; at $911,078, it is down -7.7% on an annual basis.
Ontario real estate activity dropped significantly in the first quarter of 2022, after the Bank of Canada kicked off a rapid rate-hiking cycle in efforts to reign in rising inflation. Borrowing costs have soared as a result, which has greatly dampened affordability and homebuying demand.
Today’s Ontario homebuyers are also challenged by a lack of supply, as would-be sellers remain on the sidelines. A total of 26,478 homes were brought to market in April, reflecting a -22.9% decline from the previous year. However, the number of months of inventory – a look at the long-term supply of homes to sale that’s measured by the length of time it would take it sell them off – sits at 2.6, a 1.7-month improvement. Overally, the Ontario real estate market can be considered balanced with a sales-to-new-listings ratio of 50.8%. According to CREA, a ratio between 40 - 60% indicates balanced conditions, with above and below that threshold signalling sellers’ and buyers’ markets, respectively. April’s Ontario SNLR reflects how buyer competition in the province has slowed considerably since last year, down by -22.9%.
Ontario home sales and price forecast
Following the changing narrative of stabilization from Canada’s central bank and the mortgage rate landscape, CREA has updated their forecast for the remainder of 2023 and 2024 for home sales and price growth.
According to the national organization, sales will remain flat, with 492,674 properties expected to change hands this year – a difference of -1.1%. While this is fairly unchanged from their previous forecast, CREA notes the standouts are weaker-than-expected sales in Alberta in the first quarter, while performance in Ontario exceeded expectations. Next year, sales are to rebound strongly, up 13.9% to 561,090 units; still below 2021’s record, but back in line with the 10-year average.
The national average home price is forecast to drop -4.8% this year to $670,389 – about $8,000 higher than what CREA initially called for. This will then grow by +4.7% in 2024 to $702,200 – back to 2022 levels.
In Ontario specifically, sales are expected to continue to improve this year and next: CREA forecasts a total of 187,120 homes to trade hands in 2023, marking a year-over-year increase of +2.3%, before rising to 223,451 in 2024 – a whopping jump of +19.4%!
Home values have further to go on the road to recovery, but will tick up within the next 24 months. The national forecast calls for the Ontario average home price to come in -9% below 2022 levels this year at $848,120, before ticking up by +3.6% next year to $878,934.
How do I get the best mortgage rate in Ontario?
As home to Canada's financial capital, Toronto, Ontario naturally has an extremely competitive mortgage market. All of the Big 5 Banks have their headquarters in Toronto, as do major Canadian credit unions including Meridian Credit Union, DUCA Financial Services Credit Union and Alterna Savings and Credit Union. Many other smaller lenders, credit unions and mortgage brokerages are also located in Ontario.
With such a variety of options, it's important to remember that the best mortgage rate is not always the lowest rate; rather, it's the one that meets your needs and best suits your financial situation. That makes it all the more crucial that you compare multiple lenders and speak with a mortgage broker. They can walk you through different mortgage products and help you understand the benefits and drawbacks of each so that you can make an informed decision.
What factors affect the mortgage rate I get?
The mortgage rate that you qualify for will depend on a number of factors, some of the most important of which are:
- Your down payment - The size of your down payment will determine the amount of insurance your mortgage will require. The larger your down payment, the less insurance your mortgage will require. Though it may seem counter-intuitive, uninsured mortgages actually have higher rates. This is because lenders take on more risk for these mortgages since they cannot get insurance on them. Though you may not get the lowest rate, it is usually always better to put a larger down payment if you can afford it because you won’t have to pay for mortgage insurance.
- Your amortization period - Mortgages with amortization periods greater than 25 years are not usually insurable and therefore come at a higher rate. However, a longer amortization period allows you to have a lower monthly payment.
- What the property will be used for - Will you be living in the property? Mortgage rates for rental properties are typically higher than for those that are owner-occupied.
- Mortgage type - Mortgage rates for refinances are usually higher than rates for renewals and purchases.
- Your employment status - You need to provide proof of income in the form of paystubs and/or tax documents such as your Notice of Assessment (NOA). If you're self-employed, work on commission, or otherwise do not have a steady income, it can be more complicated and/or expensive.
- Your credit score - Your credit score may affect the type of lenders that will work with you. If you have bad credit, you may not qualify for a Big Bank mortgage.
- Your debts - Lenders will look at your debt service ratio when considering whether to approve your mortgage. Carrying an excessively high amount of debt negatively impacts your debt service ratio as well as lowering your credit score.
Historical trends in Ontario mortgage rates
Ontario mortgage rates rise and fall, as do rates across Canada. Here’s an interactive chart showing the lowest mortgage rates in Canada over the past few years to give you an idea of where we are today.
Land transfer tax in Ontario
Land transfer taxes are often overlooked, despite being one of the biggest closing costs when purchasing a home. For people in Toronto, a land transfer tax is levied by the City of Toronto, in addition to Ontario’s provincial land transfer tax.
Ontario land transfer tax
In Ontario, land transfer taxes are based on the purchase price of the property, with the tax rate increasing as the price of the home rises. Here’s a breakdown of the rates:
Source: Ontario Ministry of Finance
*The $2 million bracket was introduced on January 1st, 2020.
Toronto Land Transfer Tax
When purchasing a home in Toronto, you’ll also pay a municipal land transfer tax. Toronto’s land transfer tax applies within certain boundaries: Steeles Avenue to the North, Etobicoke to the West, Scarborough to the East, and Lake Ontario to the South.
Here are the current Toronto land transfer tax rates:
Source: City of Toronto
Ontario first-time homebuyer programs
In an effort to make it easier for first-time homebuyers to get into the market, there are several programs and rebates available in Ontario. These are available to citizens or permanent residents of Canada who haven’t owned property before.
Ontario’s Land Transfer Tax Rebate for First-Time Homebuyers provides a rebate of the full amount of your land transfer tax, up to a maximum of $4,000. If you are buying with a spouse who does not qualify, you will only be eligible for 50% of the refund.
Toronto’s First-Time Homebuyers Land Transfer Tax Rebate provides a rebate of the full amount of your municipal land transfer tax, up to a maximum of $4,475. This rebate is available regardless of whether you buy a townhouse, house, or condo. You can use the Toronto land transfer tax rebate in addition to the Ontario land transfer tax rebate.
Learn more by reading our guide to First-Time Homebuyer programs in Canada.
Ontario non-resident speculation tax
In an effort to prevent foreign investors from inflating housing prices in Ontario, the Ontario government places a 15% tax on all purchases of residential properties by foreign buyers in the Greater Golden Horseshoe area. This is on top of any land transfer taxes. Foreign buyers include overseas corporations, as well as individuals who aren’t Canadian citizens or permanent residents.
Changes on the horizon
On October 25, 2022, the government of Ontario introduced the More Homes Built Faster Act, which is part of a long-term strategy to increase the housing supply and ensure that affordable housing options exist for Ontarians. Significantly, the provincial government aims to facilitate the construction of 1.5 million new homes over the next decade.
More recently, on May 10, 2023, the City of Toronto adopted two amendments - the Official Plan Amendment and the Zoning By-law Amendment - to permit multiplexes of up to fourplexes on residential lots across the city. These amendments are not yet in effect, but have the potential to create a significant amount of sorely needed new housing options for Toronto residents.
Jamie David, Director of Marketing and Head of Mortgages
Jamie has 15+ years of business and marketing experience. She contributes her mortgage expertise to The Globe and Mail and authors Ratehub’s mortgage and homebuying guides. read more