Does Canada Have Fixed Rate Mortgages and What You Need to Know

In Canada, fixed rate mortgages are available, but they're not as common as variable rate mortgages.

Fixed rate mortgages offer a set interest rate for a specified period, typically 5 or 10 years.

Variable rate mortgages, on the other hand, are tied to the prime lending rate set by the Bank of Canada.

Fixed rate mortgages can provide stability and predictability for your monthly mortgage payments, which can be beneficial for budgeting and planning.

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The Big 6 banks in Canada offer mortgage rates, but it's worth noting that these rates can vary.

You can find the best mortgage rates from Canada's Big 6 banks by clicking on their names to see a full list of their posted and discounted mortgage rates.

Some of the major banks that offer mortgage rates include BMO, TD bank, Scotiabank, CIBC, and RBC.

Canada's Big 6 Banks offer competitive mortgage rates. You can click on each bank's name to see a full list of its posted and discounted mortgage rates.

Bank of Montreal (BMO) offers mortgage rates, but you'll need to click on the link to see the full list. TD bank is another option, with its own set of mortgage rates available for review.

Scotiabank is also part of the Big 6, with mortgage rates that can be viewed by clicking on the link. CIBC mortgage rates are another option to consider.

The Royal Bank of Canada (RBC) is the final bank in the Big 6, with its mortgage rates available for viewing by clicking on the link.

Here are the Big 6 Banks listed out:

CIBC offers fixed rate closed mortgages with consistent interest payments over the mortgage term, giving you peace of mind about changing interest rates.

You can choose from various terms, including 1, 2, 3, 4, 5, 7, or 10 years, depending on your needs.

Their 5-year fixed closed mortgage has a special offer rate of RDS%rate[5].FRCM.Published(5_null_null_Years_T,null,18,null)(#O2#)% (APR RDS%rate[5].FRCM.Published(5_null_null_Years_T,null,2,null)(#O2#)%).

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With a CIBC fixed rate closed mortgage, you can prepay up to 10% of your original mortgage amount annually without paying a prepayment charge.

This flexibility can be a huge advantage if you want to pay off your mortgage quickly.

CIBC also offers a fixed-rate open mortgage, which allows you to pay off as much of your mortgage as you want, when you want, with terms of 6 month or 1 year open.

In 2024, a whopping 69% of all mortgages contracted were fixed-rate mortgages, according to the 2024 CMHC Mortgage Consumer Survey.

The majority of homeowners prefer fixed-rate mortgages because they offer stability and predictability in their monthly payments.

Mortgage rates are fixed over a 5-year term, giving borrowers peace of mind and protection against rising interest rates.

5-year mortgage rates are closely tied to 5-year government bond yields, which means that changes in these yields can impact mortgage rates.

Here are some key statistics on 5-year fixed mortgage rates:

In Canada, the Big Six banks dominate the market, with the largest banks being Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank of Canada.

The largest bank in Canada by market value is Royal Bank of Canada, with a market capitalization of over $150 billion.

Canadian banks have a strong reputation for stability and reliability, with the Canadian banking system being considered one of the safest in the world.

The Canadian banking system is heavily regulated, with a strong focus on consumer protection and financial stability.

The average interest rate on a Canadian mortgage is around 3.5%, which is significantly lower than in the US.

In the US, the largest banks are JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and U.S. Bank.

The US banking system is also heavily regulated, but the regulations are not as strict as in Canada.

US banks have a reputation for being more aggressive in their lending practices, which can be beneficial for some borrowers but also increases the risk of default.

Fixed mortgage rates in Canada are expected to increase modestly in 2025, which might make locking in for five years seem like a good idea. However, if fixed rates fall in 2026 or 2027 and stay low, you could end up paying more interest than necessary for part of your mortgage term.

Some mortgage brokerages were offering five-year fixed mortgage rates slightly above 4% as of January 2024, so it's essential to shop around for the best rates.

A 5-year fixed mortgage can be a great option for Canadians, but it's essential to weigh the pros and cons before making a decision.

Set costs are a significant advantage of 5-year fixed-rate mortgages, as they allow you to know exactly what your mortgage payments will be for the next five years, making budgeting and long-term financial planning much easier.

Some of the pros of a 5-year fixed mortgage include risk protection, where your rate and mortgage payment are locked in and won't fluctuate with changes in bond yields. This provides stability for the duration of your term, allowing you to budget with greater accuracy.

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Competitive rates are also a benefit of 5-year fixed-rate mortgages, as lenders often offer aggressive pricing for this popular term. However, be aware that you'll be charged a premium to guarantee your fixed rate.

On the other hand, there are some downsides to consider. Higher rates are a con of 5-year fixed-rate mortgages, as you'll pay more in interest over the life of the mortgage. According to a landmark study, over 90% of Canadians who have maintained a variable mortgage rate have paid less in interest than those who stuck to a fixed rate.

Breakage penalties are another con of 5-year fixed-rate mortgages, as you could be on the hook for a hefty penalty if you need to break your mortgage. The penalty will be the greater of the interest rate differential (IRD) or three months' interest, which can be expensive.

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Variable vs. Variable - It's a bit of a misnomer, but let's dive in anyway. In reality, this comparison doesn't exist in the classical sense, as the article already compares variable rates to fixed rates. However, we can still explore some key differences within the variable rate category.

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Variable rates are typically lower than fixed rates, but they can skyrocket during periods of high inflation. This is a crucial consideration for anyone considering a variable rate mortgage. The maximum prepayment penalty for variable rates is relatively low, at three months' interest.

One of the biggest advantages of variable rates is their switchability. You can switch from a variable rate to a fixed rate for the remainder of the term without penalty. This flexibility can be a game-changer for those who want to lock in a lower rate later on.

A fixed mortgage rate can be a great option for some people, but it's not for everyone. You'll know exactly how much your mortgage payments will be for five years, making budgeting and long-term financial planning easier.

One of the main advantages of a 5-year fixed mortgage is that it offers risk protection. Your rate is locked in, so you won't have to worry about fluctuations in bond yields affecting your mortgage payment.

According to a study by York University Professor Moshe Milevsky, 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.

A fixed rate mortgage can also provide peace of mind, but be aware that it may come with a higher rate than a variable rate mortgage. This is because your lender will charge you a premium to guarantee your fixed rate.

Here are some key points to consider when deciding between a fixed and variable mortgage rate:

Ultimately, whether a fixed or variable mortgage rate is best for you will depend on your individual circumstances and financial goals. It's essential to weigh the pros and cons carefully before making a decision.

Historical mortgage rates are a great way to understand which mortgage terms attract lower rates. They also make it easier to understand whether rates are currently higher or lower than they have been in the past.

Looking at the historical 5-year fixed mortgage rates in Canada, we can see that the lowest rates of the year for the last several years have been around 2.5%. This is according to the Ratehub Historical Rate Chart.

Here's a breakdown of the lowest 5-year fixed rates of the year in Canada for the last few years:

Mortgage rates have a history of fluctuating over the years, with different types of rates performing differently. For example, 1-year fixed-rate history has been relatively stable, while 5-year fixed-rate history has seen more significant changes.

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The past year has seen significant fluctuations in global markets, with the S&P 500 index experiencing a 20% decline in the first quarter of 2022.

In the technology sector, the NASDAQ composite index plummeted by 33% in the same quarter.

The US Federal Reserve raised interest rates four times in 2022 to combat inflation, which peaked at 9.1% in June.

Worth a look: What Were Mortgage Rates in 2022

The price of Bitcoin dropped to $17,000 in June 2022, a 75% decline from its peak in November 2021.

The global economy contracted by 0.2% in the first quarter of 2022, according to the International Monetary Fund.

The US government debt rose to $30.9 trillion by the end of 2022, a 25% increase from the previous year.

Looking at historical mortgage rates is a great way to understand how mortgage rates have changed over time. This can help you make more informed decisions when choosing a mortgage.

Historical 5-year fixed mortgage rates in Canada have varied significantly over the years. To give you a better idea, here are the lowest 5-year fixed rates for the last several years.

It's worth noting that these rates are for high-ratio, insured mortgages. If you're considering a mortgage, it's essential to understand the different types of mortgage rates available.

Here are the lowest 5-year fixed rates of the year in Canada for the last several years:

Keep in mind that these rates can fluctuate, and it's always a good idea to research current rates before making a decision.

Forecasting can be tricky, especially when it comes to predicting mortgage rates. Five-year fixed mortgage rates are particularly hard to predict with accuracy.

Recent downward movement in government bond yields has put lenders in a position to increase five-year fixed mortgage rates. This is what mortgage brokers predicted in late 2024.

Even analysts struggle to pinpoint when rates will move, how much they'll fluctuate, and how long they'll stay at their new levels.

Changes in 5-year fixed mortgage rates are largely influenced by 5-year Canada Bond Yields. These yields are driven by economic factors such as unemployment, export, and inflation.

Canada Bond Yields rise when market conditions are good, making it more costly for mortgage lenders to source capital and fund mortgages. This leads to higher mortgage rates unless lenders adjust their strategy.

Mortgage lenders set a spread between the mortgage rates and bond yields based on their desired market share and competition. This spread can change due to general credit market conditions.

As a result, the relationship between 5-year fixed mortgage rates and 5-year Canada Bond Yields is a key driver of changes in mortgage rates.

If you're considering a 5-year fixed mortgage in Canada, you might want to think twice if you're expecting fixed rates to drop significantly in the near future. Fixed mortgage rates are expected to increase modestly in 2025.

It's essential to weigh the pros and cons of a 5-year fixed-rate mortgage, as what's considered a good rate for one person might not be the same for another. A good 5-year fixed mortgage rate is the lowest rate you can qualify for.

Some mortgage brokerages were offering five-year fixed mortgage rates slightly above 4% as of January 2024, which might give you a benchmark for comparison.

Getting the best deal on your mortgage requires some research and planning. Check your credit score to see where you stand, as lenders use it to determine interest rates. A good credit score can save you thousands of dollars over the life of the loan.

A different take: Current Mortgage Rates for 800 Credit Score

You can also shop around for lenders to compare rates and terms. The article highlights the difference in rates between fixed-rate and adjustable-rate loans, with fixed-rate loans offering more stability but higher rates. This can be a major consideration for homeowners who plan to stay in their homes for a long time.

Consider putting down a larger down payment to reduce your loan amount and lower your monthly payments. The article notes that putting down 20% can save you hundreds of dollars each month, but it may not be feasible for everyone.

You may be eligible for government-backed loans like FHA or VA loans, which offer more lenient credit requirements and lower down payment options. These loans can be a great option for first-time homebuyers or those with limited financial resources.

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30-year mortgages would likely be extremely expensive for Canadians, with lenders charging high interest rates to hedge against potential risks.

Canadian lenders would need to charge a rate premium for longer terms to mitigate the risk of changing interest rates over a 30-year period.

This would essentially make 30-year mortgage options more costly for Canadians.

The Canada Mortgage and Housing Corp. and other insurers would likely need to play a big role to help mitigate the risk for lenders offering such long-term mortgages.

The Big Six Banks in Canada would need to be involved in implementing a U.S.-style model for 30-year mortgages, but it's unclear how much of a push they'd make due to uncertain consumer demand.

30-year rates would likely be much higher than the typical five-year fixed rate, which would further limit the market for these long-term mortgages.

Canadian homeowners benefit from having multiple shorter-term mortgage options with more manageable interest rates, allowing them to take advantage of market shifts without having to refinance their entire mortgage.

Renewing every few years gives lenders a chance to assess a borrower's creditworthiness and make adjustments as needed, providing Canadians with more flexibility and security.

For your interest: Canada Mortgage Interest Rates Graph

Fixed-rate mortgages are a popular choice for Canadians, but it's essential to understand the terms involved. A fixed-rate mortgage means your mortgage rate will remain the same until your mortgage term is completed.

If you think mortgage rates will increase in the short term, you can choose a fixed-rate mortgage for a long-term length, such as 10 years. This can provide stability and predictability in your mortgage payments.

Some mortgage brokerages were offering five-year fixed mortgage rates slightly above 4% as of January 2024. This rate is expected to increase modestly in 2025, but might fall in 2026 or 2027 if interest rates decrease.

Fixed-rate mortgages are often used when you think mortgage rates will increase, but it's also worth considering your personal financial situation. If you're unsure about the future of interest rates, you may want to go with a shorter-term length.

Here are some scenarios to consider:

Ultimately, the decision to opt for a fixed-rate mortgage depends on your individual circumstances and expectations for the future of interest rates.