Clay Jarvis
Beth BuczynskiNerdy Tip: As June gets under way, the big news for Canada’s current mortgage rates is the Bank of Canada’s decision to lower its overnight rate from 5% to 4.75% on June 5. Variable mortgage rates will finally decrease, although by a modest 0.25%. Three- and five-year fixed rates, both of which are available for below 5%, will still be the more affordable choice for some time.
Current fixed and variable mortgage rates from Canadian bank and non-bank lenders
Disclaimer: The rates displayed do not include any taxes, fees, insurance, or other additional charges. These rates are estimates and are not guaranteed. The actual rate and loan terms you receive will depend on our partner’s assessment of your creditworthiness, loan amounts, and other relevant factors. Please note that any potential savings figures provided are estimates based on the information you and our advertising partners have provided. Terms and conditions apply.
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Current mortgage rates from Canada’s Big Six banks
Rates updated: June 10, 2024
Bank |
2-Yr Fixed Rate |
3-Yr Fixed Rate |
5-Yr Fixed Rate |
5-Yr Variable Rate (Closed) |
|---|---|---|---|---|
| 7.64% | 7.20% | 7.04% | 6.95% | |
| 7.19% | 6.99% | 6.84% | 6.95% | |
| 7.39% | 6.99% | 6.84% | 7.20% | |
| 7.44% | 6.95% | 6.79% | 6.95% | |
| 7.39% | 6.94% | 6.79% | 7.40% | |
| 7.34% | 6.99% | 6.84% | 7.10% |
Posted rates for closed mortgages with amortization under 25 years. Data source: Canada's major banks
If you’d like to take a closer look at the products and mortgage rates each of the Big Six are offering, we’ve got you covered:
Current mortgage rate update: June 5, 2024
On June 5, the Bank of Canada finally reduced its overnight rate. It only came down by 0.25%, but after years of waiting, it feels like a sea change.
A lower overnight rate means lower prime rates and lower variable mortgage rates across Canada’s lending landscape. Once lenders update their mortgage offers, variable rates should be widely available for well under 6%.
If the Bank of Canada maintains its cautious approach to battling inflation, home buyers won’t see a rapid decrease in variable rates. It could be 2024 before variables are cheaper than today’s lowest three- and five-year fixed rates.
Fixed rates have held steady below 5% for weeks. Activity in the bond market doesn’t indicate they’ll be rising or falling to a significant degree any time soon.
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Current prime rates
Prime rate, the rate of interest lenders charge their preferred customers, is typically used to determine variable mortgage rates. If you’ve ever visited a bank’s mortgage rate page, you may have seen its variable mortgage rates explained as “prime minus X%”.
As you’ll see below, the prime rate at all Big Six banks is identical. That’s because each bank bases its prime rate on the Bank of Canada’s overnight lending rate. It’s worth noting, however, that TD is unique among these lenders in that they have their own prime mortgage rate, which is currently 7.35%
| Institution | Prime rate |
|---|---|
| BMO | 6.95% |
| CIBC | 6.95% |
| National Bank | 6.95% |
| Scotiabank | 6.95% |
| RBC | 6.95% |
| TD | 6.95% |
Current mortgage rates: Projections for 2024
Fixed mortgage rates
Will fixed mortgage rates fall in 2024?
Because fixed rates are tied to investor activity in the bond market, they can be tricky to predict over the medium- and long-term. But fixed mortgage rates should soften in 2024. Once interest rates begin trending down and bond prices solidify at lower levels, fixed mortgage rates should also become more affordable.
It ultimately depends on lenders, who tend to raise fixed rates much faster than they decrease them. Bond yields sunk rapidly throughout December 2023, and then rose for the first six weeks of 2024, but fixed rates have held relatively steady.
Variable mortgage rates
Will variable mortgage rates fall in 2024?
After the Bank of Canada cut its overnight rate to 4.75% on June 5, the question is how much will variable rates decrease over the remainder of 2024.
The Bank isn’t likely to reduce the overnight rate as aggressively as it jacked it up. Doing so might pump a little too much fuel into the economy, which could trigger another ramp-up in inflation. If the Bank’s first cut leads to neutral or positive results, we might be able to expect another two modest cuts before the end of the year. If the overnight rate falls by another 50-basis points, you’ll see variable rates fall by the same amount.
Mortgage calculators to assist your home buying journey
Understanding current mortgage rates
What is a mortgage rate?
A mortgage rate is the rate of interest a mortgage lender charges to borrow their money. The mortgage interest rate you’re offered will be a percentage of the principal, or the original amount you borrow.
Because mortgage interest generally compounds over a long period of time, the rate charged has a major effect on the overall cost of a mortgage. Assuming a 20% down payment, a $500,000 mortgage with a rate of 5% interest would result in a total interest charge of $372,407 over the course of 25 years. Knock that rate down to 4%, and the interest would add up to $289,030 — a difference of more than $83,000.
Calculating mortgage interest by hand can be time-consuming. Using a mortgage payment calculator is a quicker way of understanding how much a particular mortgage rate might cost you.
Posted vs. special mortgage rates
If you’re exploring mortgage rates at a large mainstream lender, like a Big Six bank, you might see two different categories of mortgage rates: posted rates and special rates.
Posted rates, a bank’s publicly advertised mortgage rates, will be higher than its special rates. In fact, when you first see posted rates, you might be surprised at how high they are.
Take a look at the current average posted rates at Canada’s chartered banks below, according to the Bank of Canada. These rates are for conventional mortgages, which involve a down payment of at least 20%.
| TERM | CONVENTIONAL MORTGAGE RATES |
|---|---|
| 1-year fixed | 7.84% |
| 3-year fixed | 6.99% |
| 5-year fixed | 6.84% |
| Prime rate | 6.95% |
Pretty steep, aren’t they? One theory behind why posted rates are so high is that they are intended to be negotiated down during mortgage discussions to make borrowers feel as if they scored a great deal. And if a borrower doesn’t negotiate, the bank can charge the full posted rate and make more money.
Special rates are posted rates that have been discounted. This might be done to create limited- time offers, but some banks’ discounted rates are also the rates they offer their mortgage broker partners.
Nerdy Tip: Make yourself familiar with a bank’s posted and discounted rates to put yourself into a stronger negotiating position. No matter how well you prepare yourself, however, know that the rate you’re offered will ultimately depend on your financial situation.
Mortgage rate types
Fixed mortgage rates
A fixed mortgage rate will not change for the entirety of your mortgage term, which is how long your current mortgage contract is in effect. Even if mortgage rates rise or fall during your term, the rate attached to your mortgage will not change — nor will the principal and interest portions of your mortgage payment.
For example, if you take out a five-year, fixed-rate mortgage at 5% in 2023, your rate won’t change until it’s time to renew your mortgage in 2028. That predictability is one reason why fixed-rate mortgages are so popular in Canada. They’re also widely available at Canadian banks.
A lender’s fixed mortgage rates are based on activity in the government bond market. Fixed rates on one-, three- and five-year mortgages, for example, tend to follow the yields on one-, three- and five-year bonds. If one of those bond yields rises, expect the associated mortgage interest rate to increase, too.
Variable mortgage rates
With a variable mortgage rate, your rate could rise or fall during the mortgage term. That’s because variable mortgage rates are based on lenders’ prime rates, which increase or decrease whenever the Bank of Canada adjusts its overnight rate.
If you take out a variable-rate mortgage and your lender’s prime rate changes, your rate will increase or decrease by the same amount. How that affects your mortgage payment depends on what kind of variable-rate mortgage you have:
- If you have a typical variable- rate mortgage (VRM), the amount of your monthly payment won’t change, but its structure will. When the rate increases, more of your payment will go toward interest; when it decreases, more will go toward the principal.
- If you have an adjustable- rate mortgage (ARM), your actual payment amount will change when your interest rate rises or falls.
The trigger rate
The unpredictability of an ARM might make it seem like the riskier of the two options, but a VRM carries a significant risk of its own. If interest rates rise quickly, your mortgage payment may no longer even cover the monthly interest costs. When this happens, you’ve hit what’s known as the trigger rate.
Once you reach your trigger rate, your bank may require you to either make a lump-sum payment or increase your mortgage payments to ensure you’re at least covering your interest charges. You may also have the option of switching your mortgage to a fixed rate for the rest of your term.
Which is better: fixed or variable?
Choosing between fixed- and variable- rate mortgages is a bit of a gamble no matter what you decide.
With a variable-rate mortgage, you run the risk of watching your rate, and potentially your mortgage payment, balloon to the point where you can no longer afford your home. If rates decline and then stay low, however, you could save a pile of money.
A fixed-rate mortgage provides predictability, and can therefore be easier to budget around. But by committing to a fixed mortgage rate, it’s harder to benefit if rates decrease. To access a lower rate in the middle of your mortgage term, you’d probably have to break your mortgage so you can refinance. That could require paying a steep prepayment penalty.
You’ll generally pay a higher prepayment penalty on a fixed-rate mortgage than on a variable-rate mortgage. Details like this are why you should consult a mortgage professional before making any decisions on how to structure your home loan.
Comparing current mortgage rates
Shop for a mortgage the way you’d search for a new vehicle: you wouldn’t normally buy the first car you see at the first dealership you walk into, and you shouldn’t commit to a mortgage until you’ve compared multiple offers across different lenders.
If you want to compare current mortgage rates from the top lenders and brokers in different provinces, you can consider:
- B.C. mortgage rates.
- Ontario mortgage rates.
- Alberta mortgage rates.
- Manitoba mortgage rates.
- Saskatchewan mortgage rates.
When comparing mortgages, don’t simply look at the current mortgage rates on offer. You have to compare the conditions of the loans you’re investigating, too. Some attractive rate offers, for example, might come with down payment conditions that not all borrowers will be able to meet. Other rates might only apply to term lengths or rate types that don’t align with your homeownership plans.
Compare mortgage rates using APR
Many lenders publish mortgage interest rates alongside corresponding annual percentage rates (APR). An APR includes any additional fees the lender may charge, so it’s a more accurate indication of what a mortgage might cost.
When comparing current mortgage rates among lenders, always try to compare APRs to get a more accurate sense of what each loan might cost you.
Broker vs. bank: Who offers the best current mortgage rates?
When getting a mortgage, you’ll generally have to choose between going directly to a lender, like a bank, or working with a mortgage broker. Deciding between the two might come down to who can score you the best current mortgage rate.
Generally speaking, a mortgage broker should offer you a wider array of options. Unlike a bank’s mortgage advisors, brokers aren’t tied to a single financial institution. They can field offers from multiple lender partners, which might include B lenders and private lenders, in addition to some Big Six banks.
Part of a mortgage broker’s job is to negotiate a better rate for you. They only earn a commission when a mortgage is finalized, so it’s in their best interest to negotiate a mortgage you can afford to sign. Bank employees with revenue targets, however, may not feel quite as motivated to cut you a deal.
Current mortgage rates and the stress test
In addition to affecting the cost of your home loan, current mortgage rates also impact how much mortgage you can qualify for by influencing the mortgage stress test.
If you’re applying for a mortgage at a federally regulated financial institution, the stress test requires you to qualify at either 5.25% or the rate being offered plus 2%, whichever is higher. If a lender offers you a rate of 5%, for example, your finances would have to support the same loan at 7% for you to qualify.
If that’s not the case, your lender will reduce the amount you’re offered until you can pass the stress test at the qualifying rate.
How to get the best mortgage rate
Boost your credit score
A credit score of 680 or higher will help you get approved for a mortgage at most Canadian lenders. The longer the list of lenders willing to work with you, the more mortgage offers you’ll have to choose from. The increased choice gives you a little more control over what your loan will cost — and a better shot at being offered the best mortgage rate.
Before applying for a mortgage or mortgage pre-approval, check your credit score and see where it stands. If there are some financial habits you can tweak to improve your credit score, get tweaking. And if you’re stuck for ideas, reach out to your bank’s financial advisor, a mortgage broker or a credit counsellor to get some ideas from a professional.
If your credit score is below 680, you should still be able to apply for a mortgage with a B lender, but a B lender mortgage might come with significantly higher interest rates.
Pay down debt
Paying down your credit balances can also help reduce the mortgage rate you’re offered.
If you’re carrying significant debt from a credit card, personal loan or line of credit, lenders may have legitimate concerns about your financial decision-making or your ability to also pay for a mortgage. Any risk they see in your debt service ratios or credit history could give them a reason to offer you a higher rate.
Negotiate
Whether you’re dealing with a big bank or small alternative lender, don’t accept the first rate offer you’re presented with.
Negotiating is a must during the mortgage process. Even if your lender isn’t willing to decimate its rate offer for you, getting a little shaved off your rate can make a significant difference.
Here’s a quick example using a home priced at $500,000. We’ll assume a 20% down payment ($100,000), a principal of $400,000 and an amortization period of 25 years.
- At 5% interest, your monthly mortgage payment would be $2,326. The total interest paid at the end of the mortgage would be $297,926.
- At 4.8% interest, your monthly mortgage payment would be $2,281. The total interest paid would be $284,327.
In this case, negotiating that 5% rate offer down by a few percentage points would save you over $13,000.
Frequently asked questions about current mortgage rates
As of April 10, 2024, 5% would be slightly higher than what many lenders are charging for three- and five-year fixed-rate mortgages. You’re unlikely to find a rate of 5% on shorter fixed-rate terms. For a variable-rate mortgage, you’re likely to pay more than 6% until the Bank of Canada starts reducing its overnight rate.
As of April 2024, bond market activity indicates that fixed mortgage rates might rise in the short term, but they’re not likely to spike suddenly. Variable mortgage rates will decrease when the Bank of Canada lowers its overnight rate. That could happen as early as June 2024.
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