Let's help you find the best mortgage rate in Ontario

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%
  
  

Current state of the Ontario housing market

• Home sales in December 2022 were 7,516 units, down 41.3% from December 2021.
• The average price for resale residential homes in December 2022 was $812,338, a 12.2% year-over-year decrease from December 2021.
• New listings in December 2022 were 9,501 units, a decrease of 9.5% from December 2021.
• The sales to new listings ratio (SNLR), meaning the number of home sales compared to new listings, was 53%.
• Months of inventory stood at 2 months in December 2022.
• The dollar value of all home sales in Ontario in December 2022 was just over $6.1 billion, representing a year-over-year decline of 48.4%.

 

Ontario home sales and price forecast

Throughout 2022, Ontario was among the provinces most affected by Canada’s cooling real estate market. It’s no surprise, then, that December 2022 home sales in Ontario fell by over 40% year-over-year. Home prices also fell by 12.2%, slightly exceeding the national average of a 12% decrease in home prices from December 2021 to December 2022. In spite of this, however, housing in Ontario is still in short supply, with nearly 10% fewer listings year-over-year and only two months of inventory. As a result, Ontario’s sales to new listings ratio (SNLR) came in at 53% in December 2022, indicating that a balanced market exists in the province. 

The total number of homes sold in Ontario in 2022 was 182,854, representing a decline by nearly one third from 2021. The Canadian Real Estate Association (CREA) is projecting a similar home sale volume in 2023, but expects the Ontario real estate market to rebound in 2024. According to CREA, we can then expect home sales to increase by about 15% year-over-year. As in the rest of Canada, home prices in Ontario actually rose by 6.8% year-over-year in 2022, but 2023 is expected to be quite different - home prices are expected to fall by 8.7% to an average of $850,876, before rebounding slightly by just over 1% in 2024.

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.