Find the best 4-year fixed mortgage rate

Whether you're looking to take on a new mortgage or renew your current one, it's important to get familiar with all of the products available to you, even the slightly more niche ones.

4-year mortgages aren't very common in Canada, with most mortgages being 5-year terms. However, 4-year mortgage terms can make sense under certain circumstances. Here's what you need to know in order to decide if they're right for you.

What is a 4-year fixed mortgage?

A 4-year fixed mortgage will have a constant interest rate over a 4-year term. The term should not be confused with the amortization period, which is the length of time it takes to pay off your mortgage. The term, rather, is the period you are committed to the contractual provisions and mortgage rate with your lender.

4-year fixed mortgage rates: Quick facts

• Mortgage rate is fixed over a 4-year term.
• Only 0.27% of all mortgage requests made on Ratehub.ca from January to December 2023 were for 4-year fixed mortgages. However, this was still more than double the 0.1% registered in all of 2022.  
• Nearly 13% of all mortgage requests made on Ratehub.ca from January to December 2023 were for short-term fixed mortgages with terms of 4 years or less, compared to just under 6% for the whole of 2022.
• 4-year fixed mortgage rates follow 4-year government bond yields.

 

Comparing 4-year fixed mortgage rates

There are a number of factors supporting the choice of a short-term rate like the 4-year fixed mortgage rate. Generally, if you believe you're in a falling interest rate environment, where rates will stay stagnant or fall, shorter terms are more beneficial. This is because your renewal date will be sooner, letting you take advantage of low rates when your mortgage is up for renewal. Short terms are also sensible if you're likely to break your mortgage within a few years – if you want to upgrade your home, for example.

Of course, with 4-year terms being so close to the typical 5-year term, the benefits of a shorter-term aren't as pronounced as they are with a 3-year or shorter term. Most people would consider 4-year terms to be a balanced term length, but offering a little more flexibility than a 5-year term.

4-year fixed vs. longer-term mortgage rates

4-year fixed rates are typically a little lower than rates on longer terms (like 5 or 10 years), but higher than short term rates, like 1-year rates. This is because longer fixed-rate terms can lock in a lower rate for a longer period of time. That might be great for you, but it puts the risk of a rate rise onto your lender. The higher rate is, therefore, a premium for locking in a lower rate for longer.

These relationships aren't always constant, however, especially in very low or high rate environments. You should always decide which term is best for you based on both the current market and your present circumstances.

4-year rates compared to other term lengths (interactive graph)

Historical 4-year fixed mortgage rates

Looking at historical mortgage rates is a good way to understand which mortgage terms generally attract the lowest rates. Historical rates also help you understand whether rates are currently higher or lower than they have been in the past.

Here are the lowest 4-year fixed rates of the year in Canada for the last several years, compared to several other mortgage terms.

Source: Ratehub Historical Rate Chart