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Three-year fixed rates have always been a “middle-of-the-road” mortgage choice.
They provide longer stability compared to shorter one- and two-year products, but don’t require as much of a commitment as, say, the ever-popular 5-year fixed.
Statistically, only about 7% of mortgagors pick 3-year fixed terms, according to Mortgage Professionals Canada.
Three-year fixed mortgage rates, like most terms, fell to historic lows over the course of 2020, falling under 2.00% for the first time.
In many cases, 3-year fixed rates can be a better choice compared to shorter terms since many include free legal fees on switches, and sometimes free appraisals too. That’s not available on most 1- and 2-year fixed rates.
Below we explore what you need to know about 3-year mortgage terms, including benefits and drawbacks.
Here some of the advantages of a 3-year fixed:
The following are some potential drawbacks of choosing a 3-year fixed mortgage:
If you want to try and predict where 3-year fixed rates are headed, we don’t recommend that. But if you want to try anyhow, look to Canada’s 3-year government bond yield.
The 3-year bond yield won’t tell you exactly where 3-year rates are heading, but they do provide a good roadmap near-term. If yields show a sustained upward trend, for example, chances are good that 3-year fixed rates will start trending higher as well.
Discounted three-year fixed mortgage rates have remained fairly stable over the past five years, typically ranging between 2% and 3%. As of September 2020, mortgage shoppers could find nationally available uninsured 3-year fixed rates for under the magic 2% mark.
At the time of the Financial Crisis back in 2008-09, discounted 3-year fixed rates surpassed 6% before trending downward in the following years.
Over the past decade, three-year fixed rates have generally:
See and compare the best mortgage rates in Canada.