Compare Today’s Lowest 5-Year Fixed Mortgage Rates

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Your Guide to Getting the Best 5-Year Fixed Mortgage Rates

If you are searching for the best 5-year fixed mortgage rates, is the top choice for borrowers across Canada. We have the resources and understanding of mortgages that can help you complete the process of securing a mortgage in Canada.

Compare 5-Year Fixed Mortgage Rates

Below is a table displaying the best rates from the five largest banks in the country. You can easily compare the rates offered by major Canadian lenders and banks, including TD Bank, RBC, CIBC, HSBC, and Scotiabank. We take care of the research to guarantee you the lowest possible rates upfront every time.

Comparing Bank Mortgage Rates

It can be time-consuming and frustrating to compare rates by yourself. With us, you can find everything you need in one convenient location. Also, ensure that you consider the mortgage product term length and type when comparing rates. For instance, if you are in the market for a fixed-rate mortgage, it is essential to examine the range of terms given by various banks, such as three-year and five-year offerings, and not just the interest rate.

Key Takeaways

  • The 5-year fixed-rate mortgage is the most popular mortgage product in Canada.
  • Fixed-rate mortgages have predictable fixed payments as their biggest advantage.
  • 5-year fixed mortgage rates are based on bond yields and the spread that lenders charge.
  • We compare and offer some of the best five-year fixed mortgage rates in Canada if you are wondering what the lowest five-year fixed rate mortgage is, we have you covered. 

Find The Best 5-Year Fixed Mortgage Rates

Did you know that the more popular choice for a mortgage historically is a 5-year fixed rate mortgage? More often than not, Canadians opt for this type of mortgage. 

A fixed-rate mortgage offers the stability of an unchanging interest and principal repayment throughout a pre-determined length. For example, if you choose to secure your rate for five years in Canada, it will remain unchanged regardless of external conditions such as market fluctuations.

With the ever-evolving mortgage market, there are various fixed-rate terms to choose from. Apart from the popular 5-year option, you can explore 1-year through 10-year rates depending on your goals and timeline.  

When your initial term expires, it’s time to renew, allowing you to get a new rate based on the five-year fixed mortgage rate. The process of adjusting and changing rates throughout an entire lifetime is known as amortization. It allows for flexibility should markets shift over time so that you can take advantage of more favourable conditions.

Your lender can provide you with valuable information regarding your mortgage renewal options. Depending on your current situation and preferences, various five-year fixed-rate mortgages are available across Canada. Whether it’s Ontario or Montreal, they will help you find the best option for you to choose, so be sure to review their rates before making an informed decision.

A major requirement that all borrowers must meet is passing the stress test and meeting the Federal standard approval guidelines. Passing the stress test implies that you surpass the Bank of Canada Benchmark Rate or surpass the contract rate even after a 2% increment has been included, regardless of the mortgage contract terms or the actual rate. The stress test aims to reduce risk on the part of the mortgage lender, and it also serves as an indicator to determine whether or not you can afford to pay your mortgage if rates have gone up by the time you are renewing.

What are the benefits of Fixed-Rate Terms? 

Fixed rates can provide peace of mind when it comes to financial stability. Knowing the exact amount you will owe for each installment, budgeting, and long-term planning become simpler and easier to manage–even if your rate is a bit higher than other options.

First-time homebuyers (FTHB) are encouraged to choose a fixed-rate mortgage when taking on their first homeownership endeavor. Doing so can provide much-needed financial security as they familiarize themselves with the associated payments and responsibilities of owning a property. By choosing one of the five-year fixed mortgages available in Toronto, Saskatchewan, or Ontario, FTHBs have access to steady repayment amounts over this period, which allows them to plan properly for all monthly expenses, including loans, taxes and fees related to maintenance/strata costs.

A Historical Recap on 5-Year Fixed Mortgage Rates

Bank of Canada’s historical rates covering the most opted-for mortgage rates since 1980 is shown in the chart below.  

Date of Rate Announcement Key Overnight Target RateChange Prime Rate at Banks
September 7, 20223.25%+0.75%5.45%
July 13, 20222.50%+1.00%4.70%
June 1, 20221.50%+0.50%3.70%
April 13, 20221.00%+0.50%3.20%
March 2, 20220.50%+0.252.70%
January 26, 20220.25%No change 2.45%
December 8 , 20210.25%No change 2.45%

Bank of Canada Key Overnight Benchmark Rate increases.

The Key Overnight Target rate is deliberated upon twice every quarter by the Bank of Canada (BoC). Lenders then review their rates at the same time as well in order to keep their prime rates in sync with the Big Six chartered banks in the country. Below, you would find the latest changes in baseline that have had an effect on the spreads to the Prime Rates used by Big Banks. 

If you actively want to learn more about this topic, you can review detailed explanations about the Key Overnight Target Rate and learn from an explainer from the Bank of Canada (BoC).

Let’s talk about the popularity of the 5-year fixed mortgage 

The 5-year mortgage term is the most popular in Canada, and for the purpose of specificity, the 5-year fixed-rate mortgage. However, although the fixed 5 year mortgage is the most common option, it may not be the best option for some from an economic point of view. 

There are three main reasons why many borrowers may decide to go for the 5-year term:

  • It is the most commonly discussed, and so they think it is the best choice
  • Lenders provide larger discounts as a result of the longer term and to avoid having to source fresh clients, making the pricing enticing
  •  They don’t have to negotiate for another 5 years after signing up

When deciding on a 5-year mortgage rate, it is necessary to consider both near and long term goals. Breaking the contract may incur additional costs from fees or penalties; therefore, consulting with an advisor would be beneficial in making sure your particular situation is addressed properly. 

What are the changes that impact 5-year fixed mortgage rates?

A debt security that governments issue to service spendings and obligations is referred to as a bond. Bonds are regarded as instruments of investment and they pay a fixed and guaranteed level of interest until they attain maturity. They are typically sold by the federal, provincial or municipal government. Bond yields are responsible for fluctuations in fixed interest rates. 

Bond yields are returns from traded bonds by banks to decide their fixed mortgage rates. Mortgages and bond yields are capital sources for big banks. However, while fixed mortgages bear a measure of risk, bonds are considered the much safer investment option. This risk borne by the lender is also included as a spread to their mortgage rates. 

There is an inverse relationship between bonds and interest rates, which implies that bond prices would generally fall when money becomes more expensive to borrow – and vice versa. This is because the bondholder receives a fixed interest rate which is more attractive if there is a fall in interest rates. This leads to increased demand and, consequently, bond prices. 

Likewise, an increase in interest rates would lead to investors not seeing any prospects in the lower fixed rates that bonds pay, resulting in lower demand for bonds and, consequently, a fall in bond price.

This explains why current bond yields have a lower interest rate than fixed mortgage rates. This allows the spread to move up and down when changes happen in the bond market due to market sentiment, economic factors, and anticipated policies. If you are locked in, other factors, such as exports, employment, and inflation, would not impact your rate. However, they can cause changes in the current 5-year fixed rates. 

An increase in bond yields makes mortgage funding more pricey for lenders, and in response to this, they would opt to raise advertised rates to rake in profits.

Frequently Asked Questions

Here are the most commonly asked questions about 5-year fixed mortgage rates in Canada. 

What is a 5-year fixed mortgage rate?

A 5-year fixed mortgage rate is a constant rate with an unchanging payment sum which remains that way for a 5-year term. Mortgages generally have a longer amortization period, and there is a good chance that it would consist of about 5 to 6 of these 5-year terms, summing up to 25 to 30 years.

How are 5-year fixed rates set?

Lenders consider several factors when setting fixed mortgage rates, with the 5-year bond yield market being one of their main considerations. This helps them understand current financing costs associated with offering a five-year loan and potential earnings from government bonds to determine optimal rate levels. A spread may be added based on the risks involved in your particular borrowing arrangement, and such decisions should always be discussed directly between the borrower and lender.

What are the differences between fixed and variable rates?

A fixed-rate remains constant throughout the mortgage term, while fluctuations occur in variable mortgages based on prime rate increases. A fixed-rate effectively allows you to budget and work towards stability in your finances because mortgage payments are unchanging.

Is it a good idea to refinance a 5-year fixed mortgage?

A cost analysis must be carried out, so you must speak with a mortgage professional. This would involve comparisons concerning interest costs you would incur on the new rate provided by the new or present lender, alongside the penalty and appraisal/discharge fees with the present lender. You would also have to determine and review the interest-carrying costs required by bringing your mortgage to term.

If I see a 5-year fixed mortgage rate I like, how do I lock it?

With a mortgage rate hold, you can lock in a rate once you have qualified and then receive a commission from the lender to maintain your mortgage at a fixed rate. This is usually done for a fixed period, such as 60 to 180 days, and may vary based on the rate offered. Lenders typically add a premium to the rate if the holding period extends for longer.

Final Thoughts

Your present situation and future goals are the main determinants of the rate and term you would end up going with. After discussing your finances and completing a cost analysis with a mortgage expert, you will be guided to the best solution.

Since mortgage value depends on the client, an extensive discussion with a mortgage expert is vital to identify a choice that works great for you.