Best mortgage rates in Canada
To see the current best Canada mortgage rates from the Big 5 Banks, click on the "Best bank rates" tab.
Ratehub.ca Insights: Bond yields have dropped even further into the 3.3% range, following a rate hold yesterday from the US Federal Reserve. Some fixed mortgage rates have decreased. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days. Variable rates are stable.
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WATCH: June 5, 2024 Bank of Canada announcement
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Canada mortgage rates: Frequently asked questions
What is the best mortgage rate in Canada right now?
As of June 7, 2024, the best high-ratio, 5-year fixed mortgage rate in Canada is 4.64%, which is available in Quebec only. Elsewhere in Canada, the best high-ratio, 5-year fixed mortgage rate is 4.74%, and is available across much of the country, including in Ontario, British Columbia and Alberta.
As of June 7, 2024, the best high-ratio, 5-year variable mortgage rate in Canada is 5.70%, which is available across Canada, including Ontario, Quebec, British Columbia and Alberta.
As of June 7, 2024, the average 5-year fixed mortgage rate available from the Big 5 Banks is 5.05%. Rates from the Big 5 Banks currently range from 4.84% to 5.14%.
To find the best mortgage rates in Canada in 2024, use our rate table to compare the lowest mortgage rates currently offered by Canada’s Big Banks and top mortgage lenders.
Will interest rates in Canada go down in 2024?
Could 2024 usher in some much-desired mortgage rate relief? Canada’s cost of borrowing has skyrocketed over the past two years; in 2022 alone, fixed mortgage rates more than doubled, while variable mortgage rates soared from their pandemic lows by over 500 basis points due to one of the steepest central bank rate-hiking cycles in history.
That trend continued steadily throughout 2023, as the Bank of Canada (BoC) administered another 75 basis points via three rate hikes (resulting in 10 total from the central bank). As a result, the lowest five-year variable rate in Canada rose from 5.3% at the start of the year, to a high of 5.95% by December 2023. Fixed mortgage rates were also driven higher by the resulting reaction in the bond market; they started 2023 at a low of 4.39%, and rose to 5.24% by year-end.
It’s no wonder borrowers are keen to know whether the cost of borrowing will become more manageable in the coming months!
The good news for borrowers is that the BoC — which controls the strength of Canada’s currency, inflation growth, and benchmark interest rate – has strongly indicated that it no longer needs to hike interest rates in order to cool runaway inflation. In its most recent rate announcement on June 5, 2024, its Governing Council wrote that steadily declining inflation had been the primary driver of its decision to cut the target for the overnight rate by -0.25% – this is the first policy rate cut since March 2020. The Bank noted that April’s CPI of 2.7% had come in below expectations, while “core” inflation measures of trim and median had fallen to 2.6% and 3.2%, respectively. Moreover, the Bank cited sluggish GDP numbers as an additional factor for cutting the target for the overnight rate. As a result, Canada’s prime rate - and by extension, variable mortgage rates - lowered in response.
Expert observers are predicting that, so long as inflation continues to decline in line with the Bank’s expectations, another rate cut is highly likely at the Bank’s next rate announcement on July 24, 2024. Should that materialize, the nation’s prime rate will fall once again, as will variable mortgage rates.
However, the Bank did note that while inflation has improved considerably – now 2.8% from the 40-year high of 8.1% in June 2022 – the measure remains above its desired 2% target, necessitating rates to stay higher for longer in order to further tamp down inflation. However, as long as the data continues to perform in line with the BoC’s expectations, it’s widely anticipated that the central bank will begin to cut rates potentially as early as the latter half of 2024 and into 2025. Should that materialize, Canada’s prime rate – and by extension, variable mortgage rates – will lower in response.
While fixed mortgage rates are not directly influenced by the BoC’s rate decisions, they are guided by the bond market, which responds sharply to investor sentiment. Bond investors react negatively to central bank rate hikes, as they devalue their existing bonds. This in turn leads to bond sell-offs, which drives up yields – the funding floor lenders use when setting their fixed mortgage rate pricing.
In fact, five-year government of Canada bond yields hit a 16-year high of 4.42% in October, which drove fixed rates up dramatically in response. Since then, bond yields have been on something of a roller coaster ride, as anxious investors react quickly to economic reports from Canada and overseas. More recently, as anticipation over a June rate cut from the Bank grew, bond yields dropped by about 30 basis points in the days leading up to the announcement. In the wake of this rate cut, some lenders have already begun lowering their fixed mortgage rates, and others are sure to follow. Should the Bank decide to lower the target for the overnight rate once more in July, we can expect a similar outcome, with bond yields falling followed by reduced fixed mortgage rates.
It is thus reasonable to expect that both variable and fixed mortgage rates will likely fall further in the coming weeks and months.
What is the lowest mortgage rate in Canadian history?
According to Ratehub.ca’s historical mortgage rate database, the lowest five-year variable mortgage rate was 0.85%, in December 2021. The lowest five-year fixed mortgage rate was 1.39%, available in January and February of 2021. Rates were at record lows at this time as part of the Bank of Canada’s response to the pandemic; interest rates were slashed in the early months of 2020 as lockdowns slowed the economy. Doing so helped stabilize consumer demand, and prevented a credit crunch from lenders, ensuring the economy operated as smoothly as possible during this unprecedented event.
However, as those lockdowns eased and consumer demand rebounded amid ongoing pandemic-related supply chain issues, inflation has soared since the start of 2022, which prompted the central bank to dramatically increase its cost of borrowing from those early 2021 lows.
How does inflation affect mortgage rates in Canada?
To combat rising inflation, the Bank of Canada increases its target for the overnight lending rate (also known as the benchmark interest rate in Canada). This in turn makes it more expensive for consumers and businesses to borrow money and incentivizes savings. As a result of people spending less and saving more, demand in the market goes down, which then decreases the rate of inflation.
When the Bank of Canada increases its benchmark interest rate, banks and other mortgage lenders also increase their prime lending rates. Since variable mortgage rates are directly tied to a lender’s prime rate (in fact, variable mortgage rates are calculated as a discount from the prime rate), when the Bank of Canada hikes its key interest rate, variable mortgage rates consequently also go up.
Fixed mortgage rates, on the other hand, are not tied to the prime rate. Instead, they are directly related to five-year bond yields. As bond yields increase, the cost to lend money also increases. As a result, lenders raise their fixed mortgage rates.
The Canadian bond market has been quite volatile in recent years, as investors have reacted to plenty of economic instability, from pandemic lockdowns to surging inflation and rate hikes. Overall, the five-year government of Canada bond yield rose from 1.25% at the end of 2021 to a peak of 4.42% in October 2023. After moderating back to the low 3% range as of early 2024, several surprisingly strong economic reports from Canada and the US pushed bond yields up to the 3.7% range, sending fixed mortgage rates slightly upward. However, as inflation declined continuously over the course of the spring, with the most recent CPI reading from April of 2.7% coming in below expectations, anticipation of a rate cut from the Bank of Canada caused bond yields to fall by about 30 basis points, down to around the 3.4% range. With the rate cut official, some lenders have already begun lowering their fixed mortgage rates, and others will soon follow. If inflation keeps trending downward, the Bank is likely to implement another rate cut in July, which will likely have a similar effect on the bond market, and, by extension, fixed mortgage rates.
How do I get the best mortgage rate in Canada in 2024?
Make sure you compare mortgage rates across the different banks, credit unions and top mortgage lenders in Canada. You can use our rate table above to compare the best mortgage rates in just a glance.
After comparing the different Canada mortgage rates currently available, you should then get a personalized quote to see which mortgage rate you can actually get given your situation. At Ratehub.ca, we can provide you a quote in just 2 minutes. To get a mortgage quote, enter some basic information (i.e. down payment amount, purchase price, location) so we can show you the lowest rate you can actually get.
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.
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Guide to Mortgage Rates in Canada
Highlights from the Bank of Canada's June 5, 2024 announcement
At its fourth announcement of the year on June 5, 2024, the Bank of Canada lowered its target for the overnight rate by -0.25% from 5.00% to 4.75%. This is the first rate cut implemented by the central bank since March 2020.
- The Bank pointed to steadily improving inflation data as the driver of its decision, with April’s CPI coming in at 2.7% and “core” trim and median measures down to 2.6% and 3.2%, respectively.
- Anyone with a variable-rate mortgage or a home equity line of credit (HELOC) will undoubtedly be very pleased with the Bank’s decision, as their rates will finally begin descending from a nearly 20-year high.
- Although fixed mortgage rates are tied to the bond market and are thus not directly impacted by the Bank of Canada’s rate cut, bond yields have dropped about 30 basis points in the days leading up to the Bank’s announcement. With a rate cut now having taken place, lenders are likely to reduce their fixed-rate mortgage products in the days to come.
- Canadians looking to buy a home or whose mortgage is up for renewal should get a rate hold to ensure they can take advantage of the best rate possible. As mortgage rates go down during the time of your rate hold, you will be eligible for the lowest rate.
- It will be interesting to see what effect this announcement will have on the housing market. While a 0.25% rate cut does not offer major relief from currently elevated prices and borrowing costs, buyers may be more inclined to enter a declining rate market, in part due to anxiety over missing their ideal buying window should demand ramp up.
May 2024: Mortgage market update
The early months of 2024 were volatile for the Canadian housing market, but there are early signs that sales activity will improve, as expectations rise that rate cuts could come from the Bank of Canada as early as the summer months.
Bond yields, however, continue to roller coaster up and down, as investors react to conflicting economic data reports. After tumbling in December and January, they're now in the upper 3% range, as markets are anxious over a “higher for longer” stance from the US Federal Reserve.
Overall, variable and fixed mortgage rates remain historically elevated. If you're shopping for a mortgage rate in Canada right now, here are some economic factors you should be aware of.
- Real estate update: The latest April data, released by the Canadian Real Estate Association (CREA) on May 15, 2024, shows things have yet to heat up for Canada’s typically busy spring market. Home buyers largely stuck to the sidelines over the course of the month, causing sales to drop -1.7% from March, with a total of 37,745 transactions. On an annual basis, that is up 10%, though CREA largely attributes this increase to the timing of the Easter long weekend. However, while sales have slowed, the number of newly listed homes continues to grow; a total of 70,346 homes were brought to market, well outpacing that of sales. The result is a slowdown in the national average home price, which fell -1.8% year over year to an average of $703,446. New listings outnumbering sales has also resulted in better market balance – the national sales-to-new-listings ratio (SNLR) fell to 53.4%. This metric measures the level of competition within the housing market; a ratio between 45% and 65% is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets respectively. Read more: National home sales fall in April as buyers stick to the sidelines
- CPI update: The April Consumer Price Index (CPI) report from Statistics Canada, released on May 21, 2024, shows steady progress continues to be made in reducing inflation’s growth, with the headline number coming in at 2.7%. That’s down from the 2.9% recorded in March, and is the lowest the inflation rate has been since March 2021. It also marks the fourth month in a row that the metric is within the Bank of Canada’s 1 - 3% target range, which is positive news for the Bank of Canada, which has been working to reduce the measure’s pace of growth. According to the report, food costs are on the decline, slowing to 1.4% in April, from 1.9% the previous month. However, gas prices rose during the same time period, with consumers paying 6.1% more at the pump on an annual basis. Shelter costs continue to be the largest contributor to inflation’s growth; mortgage interest costs are up 24.5% year over year, while rents rose 8.2%. Overall, however, the Bank of Canada should be encouraged by this month’s promising report; two of the central bank’s preferred metrics – called the CPI Median and CPI Trim – also lowered in April, to 2.6% and 3.2%, respectively. This should help pave the way for the BoC to cut its trend setting interest rate as early as its upcoming announcement on June 5th; markets are currently pricing in 50% odds.
Read more: Canadian CPI comes in at 2.7% in April
2024 Housing Market Forecast
CREA also updated its forecast for 2024 and 2025, due to growing expectations of rate cuts, and pent-up home buyer demand.
It anticipates a total of 492,083 homes will be sold in 2024, up 10.5% from 2023. Sales growth is expected to be strongest in provinces where housing demand has been consistent, such as Alberta. However, markets that have seen “historically low sales volume”, such as Ontario, BC, and Nova Scotia, will also see growth. The national average home price will rise by 4.9% to $710,468 in 2024.
Activity will continue to pick up steam in 2025, with sales to hit 530,494 units – an increase of 7.8%, and the national average home price to rise by 7% to $760,120.
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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.
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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
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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.
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