Canada's most popular mortgage term — current rates, how they're priced, and how to get the best deal in 2025.
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Open KOHO Free — Code 45ET55JSYAThe 5-year fixed mortgage rate is the benchmark product for Canadian mortgages. In early 2025, discounted 5-year fixed rates from lenders range from approximately 4.49% to 5.49%, depending on whether you go through a broker, monoline lender, or a Big Six bank. The widest range is typically between a bank's advertised "special offer" rate and what a broker can source from a monoline lender.
| Lender Type | Typical 5-Year Fixed Rate | Notes |
|---|---|---|
| Big Six Banks (negotiated) | 4.79% – 5.49% | Can often negotiate 0.25%+ off posted |
| Monoline lenders | 4.49% – 4.99% | Best rates, broker access only |
| Credit unions | 4.69% – 5.29% | May have unique qualifying rules |
| Online/fintech lenders | 4.54% – 5.09% | Rate competitive, less service |
Unlike variable rates — which track the Bank of Canada's overnight rate and prime — 5-year fixed mortgage rates are driven by the 5-year Government of Canada bond yield. When bond yields rise (as they did dramatically in 2022–2023), fixed mortgage rates follow. When yields drop, fixed rates tend to fall — with a lag of a few weeks.
Lenders add a spread on top of the bond yield to cover their operating costs and profit. This spread has averaged roughly 1.5–2.0% historically. When lenders compete aggressively for market share (as they often do in slow housing markets), spreads narrow and consumers win.
The 5-year term dominates Canadian mortgage choices for several reasons. It aligns with the typical 25-year amortization cleanly (five 5-year terms). CMHC insured mortgages default to 5-year terms in most bank product sheets. Many first-time buyers default to whatever their bank offers, which is usually a 5-year fixed.
However, the 5-year term is not always the optimal choice. In a falling-rate environment, a 2- or 3-year term lets you renew sooner at a (potentially) lower rate. In a rising-rate environment, locking in for 5 years provides protection. The decision requires forecasting — which nobody can do perfectly.
A large number of Canadians who took out 5-year fixed mortgages in 2020 and 2021 are now renewing — into rates that are 2–3% higher than their original terms. An $800,000 mortgage at 1.99% had monthly payments of roughly $3,389. The same mortgage renewing at 4.74% generates payments of approximately $4,524 — an increase of $1,135 per month. This "renewal wall" is a significant financial shock for many households and a key reason the Bank of Canada cut rates in 2024.
Your lender is required to notify you of your renewal options at least 21 days before your term ends (many do so 120 days early). You are under no obligation to renew with your current lender. Switching lenders at renewal does not trigger the mortgage stress test — but it does trigger the stress test if you increase your mortgage amount. This flexibility makes renewal one of the most important opportunities to save money.
| Term | Approx Rate | Best For |
|---|---|---|
| 1-year fixed | 5.09%–5.79% | Expecting big rate drops next year |
| 2-year fixed | 4.19%–4.89% | Medium-term rate drop expectation |
| 3-year fixed | 4.29%–5.09% | Balance of certainty and flexibility |
| 5-year fixed | 4.49%–5.49% | Certainty seekers, first-time buyers |
| Variable | 4.45%–5.10% | Rate savvy, flexibility needed |
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