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Rates are based on an average mortgage of $300,000
|Insured||80% LTV||65% LTV||Uninsured||Editor's Tips GREAT RATE|
The best mortgage rates change almost weekly. And RATESDOTCA tracks them all.
But getting the true best mortgage rate isn’t as simple as it seems. That’s because, contrary to popular opinion, the best mortgage rate is often not the lowest mortgage rate. The best mortgage rate is one that minimizes your overall borrowing costs. You can virtually never know that by merely looking at the rate itself. Prudent mortgage research entails more of a process.
It starts with finding the lowest mortgage rates for the most suitable term. That serves as your “shortlist” of mortgage options. You can then review the conditions and features that apply to each rate until you find a mortgage that checks all your boxes.
RATESDOTCA makes it easy to do that. The page you’re on helps you compare current mortgage rates side by side. You can evaluate payments, rate holds and prepayment flexibility, and then visit each lender for more details.
Mortgage rates in Canada are determined by a range of factors.
On one hand, external economic forces have considerable effect, on the other, the profile of the mortgage applicant is significant.
External factors include:
The cost of your mortgage is affected by interest rates.
When the economy is strong, interest rates tend to be higher. This is because the central bank raises interest rates when employment and inflation are high to help moderate demand, and does the inverse when they are weak.
When lenders pay more to borrow, they will charge you more in interest on a mortgage as a result.
Since many mortgage lenders in Canada borrow funds from investors abroad, the state of the global economy is also relevant.
If it costs more for banks to borrow money, it’s likely that your mortgage will be more expensive.
One of the core functions of Canada’s central bank, also known as The Bank of Canada, is to help preserve the value of the Canadian dollar so Canadians and their financial institutions can confidently make investment decisions.
One of the key factors affecting the cost of your mortgage is the BoC’s interest rate. It affects the prime rate that mortgage lenders charge consumers; when the BoC’s interest rate changes, prime rates are likely to change, too.
This is especially significant for Canadians who have a variable-rate mortgage. If the prime rate increases, the cost of their mortgage will also increase.
Banks finance the cost of holding mortgages through government bonds, which are guaranteed to be repaid.
There’s a strong correlation between government bond yields and fixed mortgage rates: When bond yields go down, fixed mortgage rates are also lower.
Your financial circumstances also have a significant impact on the mortgage rate that a lender will offer.
Their goal will be to gauge what sort of risk they assume in lending you money. When a lender is more confident of your ability to repay a mortgage, you’re likely to receive a lower mortgage rate.
To understand what sort of risk you are, a lender will closely consider the following:
Rates have been trending downward in Canada for the last five years. The ebbs and flows are caused by changes in Canada’s bond yields (driven by Canadians economic developments and international rate movements, particularly U.S. rate fluctuations) and the overnight rate (which is set by the Bank of Canada). The following are the historical conventional mortgage rates offered by the 6 major chartered banks in Canada in the past 20 years.
|Year||Conventional Mortgage - 5 Year||Conventional Mortgage - 3 Year||Conventional Mortgage - 1 Year||Prime Rate|
Before you start comparing mortgage rates, it’s key to remember that the best mortgage rates depend heavily on 10 factors:
Mortgages on refinances, for example, usually cost more than mortgages for purchases. That’s because refinances are deemed higher risk and because refinances cannot be default insured.
Jargon Buster: Default insurance protects the lender in case you don’t pay your mortgage. Insurance is either:
Mortgage rates can vary widely by term. Assuming you don’t accelerate your payments, the term (or contract period) will affect your interest cost more than any other single factor.
You want to choose a term that matches your tolerance for rate risk, first and foremost. You then want to consider your five-year plan. You wouldn’t get a five-year fixed if you only planned to stay in the home for a year, for example.
Your mortgage amount, as a percentage of your home value, is called your “loan-to-value,” or “LTV” as they say in the business.
This is a pivotal factor when shopping for mortgage rates. An LTV of 95%, for example, will get you a lower rate than an LTV of 80%, even though you have more equity with an 80% LTV mortgage. The reason is because mortgages with less than 20% equity must generally be default insured at the customer’s expense. That insurance protects the lender from losses and makes lending more economical. Hence, the lender can pass along lower rates to the borrower.
The bigger the mortgage, the more profitable the deal and often the better the rate.
Rate Tip: Use our Mortgage Calculator to figure out how much you can afford to borrow.
Home values under $1 million often fetch better rates. That’s because:
As a result, those loans cost incrementally more.
Rate Tip: Your home value is always confirmed with an appraisal or the lender’s automated valuation tool.
Generally, the longer a lender has to guarantee your rate, the more they charge.
If you close your mortgage in 30 days, for example, you’ll often find lower rates than if you close in 130 days. (130 days is typically the longest rate hold you can get from a national lender. 90-120 days is more common. “Quick close” specials are often limited to 30-day closes.)
The best mortgage rates are often for amortizations of 25 years or less. Lenders often add surcharges if you want a longer payback period, such as a 30-year amortization.
Many mortgage finance companies also have amortization minimums, like 15, 18 or 20 years. If you don’t meet their minimum, you can’t get their rates (unless you refinance, which may entail extra costs).
You’ll generally get better mortgage rates if you live in the property being financed. Non-owner-occupied properties, for example, tend to have higher rates due to the added risk to the lender. That’s especially true if they’re rented out.
As well, properties that are less liquid (like cottages) rarely qualify for the lowest rates due to potential resale risk if a customer defaults.
Where you live can have a major impact on your mortgage rate. The best mortgage rates in Toronto, for example, are usually lower than the best mortgage rates in Halifax.
That’s largely a function of the greater competition in a big market like Toronto. There are simply many more lenders serving that market and far more mortgage brokers, all vying for commissions on your business.
Naturally, the lowest rates are available only to qualified borrowers. If your credit isn’t so hot or you can’t prove enough income, you’ll need to deal with a non-prime lender.
Keep in mind, the mortgage rates you see here apply to borrowers with average to above-average qualifications only. Non-prime mortgage rates are quoted on a case-by-case basis and generally require that you use a mortgage broker.
Getting the best mortgage rates requires five main things:
It’s always easier to find the lowest mortgage rates than to find the lowest borrowing cost. That’s because lenders like to add “gotchyas” to their mortgage agreements. These are surprises that boost your cost of borrowing later. Here are four examples of such pitfalls:
Getting an online mortgage can be a great option for consumers who prefer a fully digital experience – from approval to renewal – compared to an in-person transaction at a traditional financial institution.
If you’re considering that approach, be aware of the advantages and disadvantages:
These are some of the most-asked mortgage questions in Canada, as well as advice on finding the cheapest mortgage rates in Canada.
This page contains some of the best mortgage rates in Canada. Search by mortgage type, amount and home value and the lowest rates that we track will appear for you instantly.
For the last few years, the best rates in Canada have usually been found online. That’s because internet-based lenders have been more competitive and often accept smaller profit margins. Even big banks are now joining the bandwagon with special pricing for online mortgage shoppers. RATESDOTCA tracks dozens of lenders and aggregates the best deals all in one place.
Since March 2020, the Bank of Canada’s policy interest rate has remained at an ultra-low 0.25%. In December 2021, the Bank of Canada announced it would continue to hold steady its overnight lending rate, which is used as a benchmark by lenders. With inflation running high due to supply chain constraints and gasoline prices, the central bank signalled it will not raise its policy interest rate until inflation cools down toward the bank’s 2% target, which it predicts will happen in mid-2022.
When the Bank of Canada does raise its overnight lending rate, variable mortgage rates will go up. Fixed mortgage rates are influenced by Government of Canada bond yields, which started rising steadily in September 2021. As a result, fixed mortgage rates have already started to increase. Keep in mind that predictions are based on the information at hand and are subject to change.
The best default insured rates (for people with down payments less than 20%) are typically quoted by mortgage brokers. The best uninsured rates, especially for borrowers with less than 20% down payments, generally come from banks. Some of the most competitive conventional lenders are the new e-banks, which we display in our rate tables.
This Mortgage Payment Calculator shows you your payments and amortization for any rate(s) you find on this website. You can even assume lump-sum prepayments to estimate how much faster you’ll be able to pay down your loan.
Restricted mortgages (a.k.a. “low frills mortgages") have boomed in popularity the last five years. Lenders realize that consumers want the lowest rate, so they’ve tried to strip out features from their mortgages to get the pricing lower. For some borrowers who plan no financing changes for five years, low-frills mortgages may make sense. For most Canadians, the small rate savings isn’t worth the much higher potential costs after closing. Those costs can bite you if you break, port, increase or otherwise refinance before your mortgage maturity date. Hence, for the majority of homeowners, it’s worth the small premium for a “full-featured” mortgage
Generally, not. The lowest rates in Canada are typically offered on default insured mortgages. Those are for people who put down less than 20% on their home purchase. Low insured rates are also available to people who transfer their already-insured mortgage to a new lender. Those who put down 20% or more get conventional rates, which are usually (but not always) higher than insured rates. Occasionally, however, someone putting down 35% or more on a home purchase under $1 million can get great rates similar to high-ratio rates.
Want to know how much a mortgage will set you back each month, or how big of a mortgage you'd qualify for, or whether refinancing make sense? Our Canadian mortgage calculators have these answers and then some. When it comes to home financing it's easy to take on more debt than you planned. So crunch the numbers, keep your monthly expenditures at a comfortable level and stay on budget.
Canadian mortgage performance
|# of Mortgages||# in Arrears||% in Arrears|
|2021 (to July 31st)||4,975,818||9,157||0.18%|
*Based on the difference between estimated deep-discount 5-year fixed rates from Canada's top six banks and the lowest comparable rates on RATESDOTCA, as of January 14, 2022.