Best 5-Year Fixed-Rate Mortgages In Canada For 2025

According to our data, the average 5-year fixed-rate mortgage rate (including special rates) currently offered by Canada’s Big Six Banks is 4.62%.

Rates as of March 24, 2025

Fixed-rate mortgage rates are priced off of Government of Canada 5-year bond yields that fluctuate daily. Five-year fixed mortgage rates are typically 1.5% above the 5-year yield, though this spread can vary between 1% and 2%. This means if bond yields go up, fixed-rate mortgage rates also go up. Periods of high inflation (which occur when the CPI is above the Bank of Canada’s 2% target) cause bond yields to rise; conversely, when inflationary pressures cool, bond yields also come down. For example, in 1981 when the CPI averaged 12.5%, Canada experienced the highest inflation in 33 years. In September 1981, bond yields hit 18.78% and the 5-year fixed mortgage rate hit 21.75%.

As of March 24, 2025, the 5-year benchmark bond yield is 2.669%, down 85.17 basis points (or 0.8517%) from one year ago and down 29.52 basis points this year.

Variable-rate mortgages are affected by the Bank of Canada’s (BoC) monetary policy, namely interest rate hikes and cuts that occur eight times a year. The prime rate, or the rate the banks use to set the interest rates on their variable-rate products, is currently 4.95%, though some banks may post a different rate. For example, TD Bank’s prime mortgage rate is currently 5.10%. Variable rates will be quoted as plus or minus compared to the prime rate.

On June 5, 2024, the Bank of Canada cut its key interest rate by 25 basis points to 4.75%, its first rate cut in over four years. Then, on July 24, the central bank cut rates by another 25 basis points to 4.5%, again on September 4 to 4.25%, and then by 50 basis points on October 23 to 3.75%. On December 11, the Bank cut rates by another 50 basis points to 3.25% and again, on January 29, 2025, the bank cut rates to 3%. Most recently, on March 12, the Bank cuts rates to 2.75%. The BoC is widely expected to implement more rate cuts in 2025.

Related: How Mortgage Rates And Interest Rates Work

According to the most recent (February 2025) Monthly Housing Market Report from the Canadian Real Estate Association (CREA), national home sales dropped 9.8% month-over-month in February 2025 and 12.7% compared to the same period last year. This marks the lowest level for home sales activity since November 2023 and the largest month-over-month decline since May 2022.

“The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last. This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity,” noted Shaun Cathcart, CREA’s Senior Economist. “This is already being reflected in renewed price softness, particularly in Ontario’s Greater Golden Horseshoe region.”

Declines were broad-based, noted the report, with sales falling in about three-quarters of local markets and almost all large markets, with the most pronounced drops in the Greater Toronto Area and surrounding Golden Horseshoe regions.

There were 146,250 properties listed for sale across Canada at the end of February 2025, up 13.1% from the same time last year but below the long-term average of 174,000. 

“The uncertainty of the last few weeks seems to be causing some buyers to think twice about big financial decisions right now,” noted James Mabey, CREA Chair. “For others, a softer pricing environment and now lower interest rates will be a buying opportunity.”

The national average price was $668,097 in February 2025, down 3.3% year-over-year. 

As of March 24, 2025.

At its most recent rate announcement on March 12, 2025, the Bank of Canada (BoC) cut its key interest rate by 25 basis points to 2.75%, its seventh consecutive rate cut. Given the growing uncertainty caused by the escalating trade war between Canada and the U.S., the BoC was widely expected to continue rate cuts with this announcement.

“The Canadian economy ended 2024 in good shape. Inflation has been close to the 2% target since last summer. Substantial cuts to our policy rate through the second half of last year boosted household spending and economic growth,”  said BoC Governor Tiff Macklem in his press conference opening statement. Headline inflation has eased from 8.1% in June 2022 to 1.9% in January 2025 and now firmly sits within the central bank’s 1% to 3% target. Added Macklem, “However, in recent months, the pervasive uncertainty created by continuously changing U.S. tariff threats has shaken business and consumer confidence.” 

Against this backdrop, Governing Council decided to cut rates by another 25 basis points.

While it will take some time for the impact of higher costs and weaker demand to make their way through the economy, despite our solid economic footing going into 2025, Mackem said that Canada is now facing a “new crisis” and that the economic impact of U.S. tariffs could be “severe” depending on their extent and duration. He added that the “uncertainty alone is already causing harm.”

“Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation. The focus of Governing Council will be on assessing the timing and strength of both the downward pressure on inflation from a weaker economy and the upward pressure from higher costs,” noted Macklem. “As always, the Bank will be guided by our monetary policy framework and our commitment to maintain price stability over time.”

The next scheduled rate announcement is on April 16, 2025.

Related: The Bank of Canada Cuts Key Interest Rate to 2.75%

Canada’s inflation rate came in much hotter than expected, spiking up to 2.6% in February, following a 1.9% increase in January. The broad-based acceleration was driven mainly by the end of the Fed’s GST/HST tax holiday. Lower gas prices helped moderate the upward pressure.

On a monthly basis, the CPI rose 1.1% in February, following a more moderate 0.1% increase in January. The Bank of Canada’s preferred measures of core inflation also heated up month-over-month, with both CPI-median and CPI-trim at 2.9%, compared to 2.7% in January. There is growing concern over the persistent acceleration of core inflation.

As expected, food prices started bouncing back after the end of the GST/HST holiday: food inflation increased 1.3%, while food purchased at restaurants decreased only 1.4%, compared to 5.1% in January. Food purchased from stores is up 2.8% year-over-year. As the GST/HST tax holiday was still in effect during the first 15 days of February, food inflation is expected to keep heating up into the next CPI announcement.

Shelter inflation provided some good news for a change, with shelter hitting the slowest pace of growth since May 2021. Mortgage interest costs (MIC) increased 9% year-over-year and rent increased 5.8%, significantly off their peaks of 31% and 9% respectively.

Gasoline prices slowed on a year-over-year basis, with a 5.1% increase in February compared to a 8.6% gain in January. On a monthly basis, gas prices rose only 0.6%. While higher refinery costs were tempered by global concerns over the impact of Trump’s tariffs, the end of the consumer carbon pricing in April will likely lead to a gradual decrease at the pump.

A note about the GST/HST holiday: Prices in the CPI are final prices, including taxes paid by consumers, meaning that CPI changed due to changes to any taxes. The federal government announced a temporary GST/HST break on certain goods from December 14, 2024, to February 15, 2025; affected goods included food, alcoholic beverages and tobacco/cannabis products, children’s clothing and footwear, diapers, car seats, toys, games, books, newspapers and Christmas trees. Approximately 10% of the all-items CPI  were affected by the tax exemption.

Statistics Canada will release the March CPI figures on April 16, 2025. 

Related: Inflation Rate Spikes Up To 2.6% In February

We reviewed 100 mortgage lenders that do business both online and in-person throughout Canada. The lenders we reviewed represent some of the largest mortgage lenders by volume, which includes banks, credit unions and online lenders. Lenders that didn’t provide their mortgage rates or operate in fewer than four provinces or territories were not eligible for review.

Our rates were generated through publicly available posted rates on the lender’s website, but also through the following borrower profiles that we presented to the lender anonymously by phone or online:

Profile 1

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $790,000
• Down Payment: 20% ($158,000)
• Credit Score: 700-719
• Postal Code: N2L 1V6 (Waterloo, Ontario)

Profile 2

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $1,300,000
• Down Payment: 20% ($260,000)
• Credit Score: 700-719
• Postal Code: V6A 2W5 (Vancouver, British Columbia)

Profile 3

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $300,000 ($60,000)
• Down Payment: 20%
• Credit Score: 700-719
• Postal Code: S4P 3C8 (Regina, Saskatchewan)

Profile 4

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $440,000 ($88,000)
• Down Payment: 20%
• Credit Score: 700-719
• Postal Code: B3S 0J1 (Halifax, Nova Scotia)

Our scores out of five are based on the following factors:

• Rate – 75%
• Timeliness – 5%
• Prepayment privileges – 5%
• Penalty calculation type – 10%
• Availability of discount rates – 5%

Please do not take the rates posted here as gospel. They are intended to only offer a ballpark and sample of the rate a lender may offer for that particular mortgage term. That does not mean that you will qualify for the above rates or that they haven’t changed those rates since publication. Please consult a mortgage lender or broker to get the best rate possible for your particular property-buying circumstance and financial situation.

A conventional mortgage is one with a down payment of at least 20%. That means you usually don’t need to pay premiums on mortgage default insurance. If your down payment is less than 20%, it’s a high-ratio mortgage and you must get mortgage default insurance.

A fixed-rate mortgage has a rate that doesn’t change and the payment amount stays the same for the entire term.

A five-year fixed-rate mortgage is a mortgage where the borrower pays a fixed and unchanging interest rate on the loan for a mortgage contract length (known as a term) of five years.

Once that term expires, the borrower can choose to renew their mortgage with the same lender for the same or a different term length and try to renegotiate a better interest rate than they were offered for the duration of the previous mortgage term. The borrower may also sign a mortgage contract with a different lender for the same or different term length and a better interest rate, once the previous mortgage term expires. If the borrower tries to break their mortgage contract before the expiration of their mortgage term, they can do so but they will be subject to a financial penalty.

What Flexibility Does a Fixed-Rate Mortgage Offer?

Many mortgages come with prepayment privileges. As a result, you’re allowed to make larger regular or lump-sum payments without paying a penalty.

The increase in regular payments or lump-sum payment amounts are often capped at a certain percentage annually. The percentage amount varies by lender. Some lenders may not allow prepayments at all or force you to pay a penalty if you do make a prepayment.

While fixed-rate mortgages offer some flexibility, variable-rate mortgages tend to be more flexible because there’s usually an option to convert to a fixed-rate mortgage without paying a penalty. With a fixed-rate mortgage, there isn’t an option to switch to a variable rate.

How are Canadian 5-Year Fixed Mortgage Rates Determined?

Canadian five-year fixed mortgage rates are determined mainly by two things, the bond market and the borrower’s personal financial situation. Since government bonds are some of the most secure financial instruments to borrow money against because they are backed by the government, banks invest in them to keep their profits stable. Therefore, when the price of bonds decreases, banks lose money. As a response, you’ll often see them raise interest rates on fixed-rate mortgages in particular.

Bonds going down in price may influence fixed mortgage rates in general, but the actual rate a borrower is offered depends on personal financial factors like their credit score, the down payment amount they were able to put on the home they purchased and their debt-to-income ratio.

If their credit score is high, their down payment is 20% or more and their debt to income ratio is low, the borrower will likely receive a pretty good interest rate on their 5-year fixed rate mortgage.

Is a 5-Year Fixed-Rate Mortgage Right for You?

A five-year fixed rate mortgage is right for you if you are looking for stability in how much your mortgage will cost from month to month for a period of five years. They are beneficial in high interest rate environments if you can lock in a lower rate before interest rates are expected to go up. You can also expect fixed mortgage rates of all terms to be lower than variable rates in high interest environments.

That being said, if interest rates drop lower than the interest rate you received on your fixed-rate mortgage and you still in the middle of your five-year term, you will not be able to take advantage of the lower interest rate and save money until your five-year term expires and by then, interest rates may have gone up again.

Is it Better To Choose a 2-Year or a 5-Year Fixed-Rate Mortgage?

If you are trying to decide between a 2-year fixed-rate mortgage and a 5-year fixed-rate mortgage, you’ll need to evaluate what is important to you.

If you choose the 5-year fixed-rate mortgage, you’ll know what your payments are for the next five years, which will make budgeting easier for a longer period of time. However, you won’t be able to take advantage of any drops in interest rates over the next five years, which are widely predicted to begin in June or July 2024.

If you choose the 2-year fixed-rate mortgage, you’ll have set mortgage payments for a shorter period of time and the interest rate may be higher or it may be lower at the end of the two years. (Though as rates are at the higher end of the historical spectrum, they are more likely to be the same or lower.)

While the 5-year fixed-rate mortgage has traditionally been the preferred option, some homeowners are choosing a shorter term to take advantage of drops in interest rates. They plan to lock in for a longer period once rates have fallen below their historic highs.

Pros and Cons of a 5-Year Fixed-Rate Mortgage

Like most things in life, five-year fixed-rate mortgages have their advantages and drawbacks:

Pros

• Expected cost for a stated period of time. You’ll always know what interest rate you will pay over the life of the term and your monthly cost will stay consistent. This is great for budgeting and you won’t have to worry about changes in interest rates for the term of your mortgage contract.
• Straightforward. How five-year fixed-rate mortgages work is relatively straightforward and easy to understand.
• Widely available. Most lenders offer five-year fixed-rate mortgages, so it’s easy to shop around and find a better rate when your term expires.
• You’ll continually pay off your loan each month. That means a larger amount will go towards paying down the original amount borrowed each time you make a mortgage payment, even if rates rise.

Cons

• Missing out on a drop in interest rate. You won’t be able to take advantage of a lower interest rate until your five-year term expires. Your lender might offer mortgages with lower rates, but you’ll be stuck paying a higher rate for the duration of your five-year term.
• Prepayment penalties. If you try to break your mortgage before the five-year term expires or if you pay more than your monthly mortgage payment, you’ll be subject to expensive prepayment penalties.  The amount will vary based on the amount borrowed and changes in interest rates.
• Lack of flexibility. Life circumstances are not anything we can predict, especially five years from now, so you may have no choice but to break your mortgage contract in the middle of your term, which will be expensive, but might be necessary. f you have a variable-rate mortgage, you’re usually able to switch to a fixed-rate mortgage without paying a penalty.

Alternatives to a 5-Year Fixed-Rate Mortgage

Choose a 5-year variable-rate mortgage: If you’re comfortable with fluctuating mortgage payments, a variable-rate mortgage allows you to take advantage of falling interest rates. If you decide you later want to switch to a fixed-rate term, the penalties are usually lower than with a fixed-rate mortgage.

Choose a shorter fixed-rate term: If you like the predictability of a fixed-rate mortgage but don’t want to lock in your interest rate for the next five years, you could choose a shorter term, such as the commonly offered one or three-year fixed-rate term. However, the interest rate for a shorter term may be higher than the 5-year term. For example, these are the fixed-year rates currently offered by Nesto Inc. on insured mortgages (as of March 2025):

2-year fixed rate: 4.63%
3-year fixed rate: 4.19%
4-year fixed rate: 4.44%
5-year fixed rate: 3.94%

Learn more: Nesto Mortgage Rates 2025

There are a number of factors to consider when choosing the best five-year fixed-rate mortgage for your needs:

Amortization Length

This is the amount of time it will take to pay off your property in full. While your term at a fixed or variable interest rate may expire, your amortization period stays the same for as long as you are paying off the balance of your mortgage. Most amortization periods in Canada go up to 25 years. It’s possible to get a 30-year amortization period, but those mortgages must be uninsured so they need a down payment of 20% or over, unless you are a first-time buyer and you are buying a newly built home, as new legislation allows for a longer amortization period. If you select a shorter amortization period, you will pay less interest over the life of your mortgage, but your monthly payments will be higher.

Fees

There are fees that are typical, such as appraisal fees for mortgage renewals, but some private lenders may charge various fees in exchange for the chance at a lower mortgage rate. These fees can certainly increase your costs, so it’s important to talk to your lender and mortgage broker about just what fees you’ll be paying and how much they will be before signing your mortgage contract.

Prepayment Penalties

Prepayment penalties are an expensive cost you will have to pay if you break your mortgage contract with your lender before the expiration of your term or if you pay more than your annual mortgage payment without having prepayment privileges or paid over the allowable prepayment privileges percentage.

Prepayment penalties are calculated either as three months’ interest on the prepayment amount or the interest on the prepayment amount for the remainder of your current term (whichever is higher). The interest on the second option is typically calculated using the interest rate differential, which is usually the difference between the interest rate in your mortgage contract and the posted interest rate for your type of mortgage at the time you’re assessed the penalty.

Portability

Portability is when a lender allows you to transfer your mortgage contract from your old home to your new home without paying a penalty. If your new home amount is less than your old one you will get to keep your current mortgage interest rate. If the cost of your new home is more than your old one, your lender will likely offer a blended interest rate, which combines your old rate with the current one.

Open vs. Closed Mortgages

Five-year fixed-rate mortgages, and all fixed-rate mortgages, are generally considered closed mortgages. This means that paying more than your monthly payment is usually akin to breaking your mortgage contract and will subject you to prepayment penalties unless your mortgage comes with prepayment privileges. This is a predetermined annual percentage that you can pay that sits above your annual mortgage payment every year. If you’re within this percentage, you won’t be penalized, but if you are above it, you will be.

On the other hand, open mortgages allow you to change your mortgage payment frequency along with how much you pay whether it be a lump sum or monthly payment, and how much you pay with each payment that you make. The advantage of open mortgages is they offer greater flexibility to the borrower than closed mortgages.

Learn more: Understanding Open and Closed Mortgages

What Fees Will I Pay with a Fixed-Rate Mortgage?

There are a number of fees you might pay when buying a home, such as:

• Property appraisal fees
• Land survey fees
• Legal costs
• Title insurance
• Land transfer taxes
• Prepaid utility bills and property taxes
• Moving costs

These are usually referred to as closing costs.

Other closing costs may include federal or provincial taxes if the property is new or was significantly refurbished. You may also qualify for the GST/HST new housing rebate.

If your down payment is less than 20%, you also have to get mortgage default insurance. This is sometimes known as Canadian Mortgage and Housing Corporation (CMHC) insurance.

There are also land transfer taxes in some provinces or municipalities. First-time homebuyers may be able to get a refund on these taxes in some provinces.

If you break your mortgage, there are additional fees you will need to pay. More details are described below.

A fixed-rate mortgage offers a fixed interest rate for a set period of time, while a variable-rate mortgage means that the interest rate changes as the prime rate rises and falls. There are advantages and drawbacks to both models. Fixed-rate mortgages are very predictable because you know exactly what you are paying for a set amount of time and your mortgage interest rate stays the same even when the Bank of Canada raises the overnight interest rate.

On the other hand, if interest rates go lower, you won’t be able to take advantage of the savings, without paying a penalty, until after your mortgage term (and contract) expires. Plus, variable-rate mortgages are generally open mortgages that give you payment flexibility and you can switch to a fixed-rate mortgage at any time. However, you cannot switch from a fixed-rate mortgage to a variable rate one.