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5-year variable mortgage rates in Canada

To see mortgage rates for other terms and types, click on the filters icon beside down payment percentage.

ratehub.ca insights: Bond yields are hovering in the 2.9% range, which could put upward pressure on fixed mortgage rates. Getting a pre-approval is recommended when shopping to lock in a rate for up to 120 days. Variable rates remain stable.

Transaction type

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Down payment $

Rate term

Amortization

Occupancy

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Rate	Provider	Payment
	Canadian Lender	^$2,366
	Canwise A Ratehub Company	^$2,401
	Big 6 Bank	^$2,412
	First National	^$2,412
	Equitable Bank	^$2,424
	CMLS Financial	^$2,424
	Desjardins	^$2,458
	MCAP	^$2,470
	TD Bank	^$2,479
	Scotiabank	^$2,482
	Alterna Savings	^$2,482
	Meridian Credit Union	^$2,491
	Bank of Montreal	^$2,496
	ICICI Bank Canada	^$2,635
	motusbank	^$2,647
	RBC Royal Bank	^$2,424
	National Bank of Canada	^$2,517
	Tangerine	^$2,517
	Simplii Financial ™	^$2,517

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WATCH: September 4, 2024 Bank of Canada announcement

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5-year variable rates: Frequently asked questions

What is the best 5-year variable mortgage rate in Canada?

As of October 17, 2024, the best high-ratio, 5-year variable rate in Canada was 5.3%. To see today's rates, visit our rate table to see the 5-year variable mortgage rates offered by Canada’s Big Banks and top lenders.

To get a personalized mortgage quote, click on the preceding link and enter some basic information (i.e. down payment amount, purchase price, location) so we can give you a more accurate quote within 2 minutes.

Why did variable rates go up so much in 2022 and 2023?

Variable mortgage rates are directly correlated with the Overnight Lending Rate set by the Bank of Canada, which in turn sets the benchmark for the Prime rate in Canada. The latter is then used by consumer lenders when setting the pricing of their variable mortgage rates.

The Overnight Lending Rate was increased aggressively by the BoC over the last two years; the central bank increased this target rate seven times in 2022, and an additional three times in 2023, bringing the total to a historic 10 rate hikes – the steepest monetary policy tightening cycle in Canada’s history. In all, the increases brought the BoC’s rate from its pandemic-era low of 0.25%, to 5%, where it remains today. As a result, Canada’s prime rate is currently 7.2%.

As variable mortgage rates are calculated as a discount from the prime rate, lenders responded to these increases by raising variable mortgage rates in kind; according to Ratehub.ca’s historical rate database, the lowest five-year variable mortgage rate available in 2022 was 0.89%. In sharp contrast, that has increased to 5.95% as of early 2024.

These rate hikes were in response to rampant inflation growth, which soared to a 40-year high of 8.1% in June 2022. This was mainly due to price increases as a result of the supply-chain challenges that had built up during the pandemic, as well as renewed consumer demand for dining, travel, and other services. The latest inflation report from Statistics Canada indicates inflation growth came in at 3.1% in November – promising progress, but still higher than the 2% target range desired by the BoC.

Will variable mortgage rates continue to go down in 2024?

Variable mortgage borrowers will be relieved to know that mortgage rates are continuing to fall. With the Bank of Canada having implemented a rate cut of -0.25% at its most recent announcement on September 4 – its third consecutive rate cut since March 2020 – Canada’s prime rate dropped from 6.7% to 6.45%. In consequence, the prime rates of banks across the country and their variable mortgage rates fell almost immediately. While it’s impossible to predict rate direction with certainty, most market observers are predicting another rate cut in September, barring any major surprises.

In commentary released on September 4, 2024, the BoC’s Governing Council wrote that inflation has continued to slow; not only had Canada’s July CPI of 2.5% aligned with expectations, but inflation was declining in the United States and elsewhere as well. While the Bank reaffirmed its commitment to restoring price stability for Canadians, it is highly likely that, should inflation keep trending downwards, we’ll see more rate cuts in 2024.

As long as current trends persist, it’s likely the central bank will keep cutting rates over the rest of 2024 and into 2025, perhaps by as much as 200 basis points (since the first cut in June), spread over five to six rate cuts. Should that materialize, Canada’s prime rate and lenders’ variable mortgage rates will be cut further in response.

Should I switch my variable-rate mortgage to a fixed-rate mortgage if the prime rate increases?

You may be thinking about locking in a fixed rate because the prime rate increased throughout 2022 and 2023, and your variable rate has moved higher. However, it’s important to note that fixed rates have been increasing significantly as well. Therefore, you have to choose between a variable or fixed rate based on the current rate environment and your decision should come down to your appetite for risk and your household finances.

The Bank of Canada reduced its target for the overnight rate from 4.5% to 4.25% at its last announcement on September 4, citing falling inflation in Canada as well as the US and elsewhere as its primary reason for doing so. In its accompanying commentary, the Bank reaffirmed its commitment to restoring price stability for Canadians.

Before switching your mortgage, the main thing to consider is the spread between your current variable rate and the best fixed or variable rate you can get today.

Read: Should you switch from a variable-rate to a fixed-rate mortgage?

Read: Think mortgage rates will drop? The argument for getting a variable rate now

If the spread between your current rate and the best rate you can get today is greater than the amount by which you believe the prime rate will increase for the rest of your mortgage term, then you may end up saving more by keeping your current variable rate.

If the discount to prime of the best variable rate you can get today is bigger than your current variable rate, then switching to a new variable rate may afford you more savings and provide a greater cushion against further rate increases.

If you believe that you can save more money by breaking your current variable rate, make sure to account for the cost of breaking your mortgage. You can use Ratehub’s penalty calculator to help you estimate this cost.

Lastly, if your biggest concern is the change to your monthly mortgage payments, there are some lenders who offer variable rates with “fixed” mortgage payments that do not change during the term. In such cases, when prime goes up, your monthly payment remains the same but the percentage of your payment that goes towards your principal decreases. This means that more of your payment goes towards paying the increased interest and ultimately it may take you longer to pay back your mortgage amount in full. That said, you should be aware that these types of mortgages are subject to hitting what is known as the trigger rate, wherein your payments are no longer going to the principal, and may not even be covering the costs of interest in full. Once this happens, you go into what’s called ‘negative amortization’, where you are actually losing equity that you’ve built up in your home. This can lead to you reaching your trigger point, where your payments are so much less than even the cost of interest on your mortgage loan that you need to increase them. Trigger points vary from lender to lender, and are spelled out in your mortgage contract.

Is it worth getting a variable-rate mortgage?

Whether or not a variable-rate mortgage is right for you depends on your risk tolerance as a borrower. Because variable-rate borrowing product rates are determined as either a plus or minus from the Prime rate, they fluctuate whenever the Bank of Canada makes a change to its trend-setting Overnight Lending Rate. This means it’s possible that a borrower would see their interest rate and their payment increase over the course of their mortgage term, should the Bank of Canada hike its rate during that time frame. As well, variable borrowers who have a fixed-payment schedule would see less of their payment go toward their principal mortgage loan in this scenario, which could put them at risk of hitting their trigger rate, and their mortgage negatively amortizing.

With the BoC having now carried out its third rate cut in a row on September 4 (after not having done so for over four years prior to the first rate cut implemented on June 5), the strong current consensus among investors and market analysts is that the BoC will implement further rate cuts through the latter half of 2024, and throughout 2025. Some forecasts have called for as many as five to six cuts before the BoC is through, totalling 200 basis points (including the three cuts since June).

Variable mortgage rate products also offer greater flexibility; unlike fixed-rate mortgages, which incur a hefty interest-rate-differential penalty when broken, a variable-rate mortgage term can be ended before renewal time for just three months’ of interest. Most mortgage lenders can also convert an existing variable rate into a fixed-rate option at the borrower’s request, without penalty.

Also read: Think mortgage rates will drop? The argument for getting a variable rate now

What impact do elevated variable rates have on the stress test?

Variable mortgage rates remain high from a historical perspective, which in turn increases the mortgage stress test threshold borrowers must prove they can pass when qualifying for a mortgage.

the qualifying rate (currently 5.25%), or
your contract rate + 2%

As of October 17, 2024, the lowest 5-year variable rate available in Canada is 5.3% and the lowest 5-year fixed rate in Canada is 3.99%. As such, both variable rates and fixed rates are now stress tested using your contract rate +2% as this will always end up being higher than the current qualifying rate of 5.25%. Today’s mortgage stress test starts in the 6.5 - 7.5% range for many borrowers.

What is Canadian Lender and Big 6 Bank?

On our rate comparison tables, Ratehub.ca features generic brands like “Canadian Lender”. The “Canadian Lender” rate represents the lowest rate our brokerage can offer among the different lenders we work with. This means that this rate can be from a Big Bank, trust company, or lending company. The reason we do not advertise the rate under the name of the actual lender offering it, is because the rate is only available through our brokerage, via a special volume discount or promotion.

Similarly, “Big 6 Bank” is another generic provider that is used to advertise the lowest Big Bank rate that the Ratehub.ca brokerage can offer.

5-year variable rates vs. 5-year fixed rates

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A guide to 5-year variable mortgage rates

Jamie David, Sr. Director of Marketing and Mortgages

October 15, 2024

October 2024: Mortgage market update

The housing market in Canada has seen a rather quiet year so far, as buyers are staying on the sidelines in anticipation of lower rates. With the Bank of Canada having implemented its third policy rate cut since March 2020 on September 4 (the first two having been in June and July) and further cuts broadly expected, it is possible that home sales will finally start to pick up.

Variable mortgage rates have fallen in proportion to the Bank of Canada’s September rate cut, and, with another rate cut anticipated in October, further downward pressure on rates is on the horizon.

Fixed rates are tied to bond yields, which have tumbled in the wake of the Bank of Canada’s rate cut and a number of economic reports from Canada and the US. As a result, fixed mortgage rates have decreased slightly as well.

Overall, though, when looked at from a historical perspective, both fixed and variable mortgage rates are currently elevated. Anyone shopping for a mortgage rate in Canada today should be aware of the economic factors below.

Real estate update: The Canadian housing market gained momentum in September 2024, with home sales rising by 6.9% year-over-year, totaling 37,733 transactions, according to the Canadian Real Estate Association (CREA). This increase follows the Bank of Canada’s three quarter-point rate cuts from June 2024, enticing more buyers back into the market. Mortgage rates have become more favorable, driving renewed demand among prospective homeowners. The national average home price increased by 2.1% year-over-year to $669,630, reflecting the increased buyer activity, while newly listed properties rose by 4.9% from August, creating more options for buyers. However, overall inventory remains below the historical average at 4.1 months, pointing to balanced conditions in the housing market. According to CREA, inventory levels between 3.6 and 6.5 months indicate a balanced market. In light of these trends, CREA has slightly lowered its forecast, now expecting 468,900 home sales in 2024. However, with further interest rate cuts anticipated in 2025, sales are projected to increase by 6.6% next year.

Read more: National home sales rise in September following summer rate cuts
CPI update: The latest inflation data released by Statistics Canada on October 15, 2024, shows that the Consumer Price Index (CPI) increased by just 1.6% year-over-year in September, significantly lower than both the expected 1.8% and the Bank of Canada’s 2% target. This marks the lowest inflation growth since early 2021, largely driven by a steep -10.7% drop in gasoline prices. Mortgage interest costs, a major factor in the CPI, continued their downward trend, with year-over-year growth slowing to 16.7% from 18.8% in August. This indicates that the effects of previous rate cuts by the Bank of Canada are beginning to ease pressure on borrowers. With inflation now under the central bank’s target, experts predict the Bank of Canada will move swiftly to reduce interest rates further. There is growing consensus among analysts that a half-point rate cut could be announced on October 23, lowering the overnight rate to 3.75% and providing much-needed relief to borrowers.

Also read: Canadian CPI falls to 1.6% in September, increasing chance of half-point rate cut

Canadian mortgage reform update

On September 16, 2024, the federal government announced sweeping changes to mortgage qualification rules for first-time home buyers, as well as those purchasing newly-constructed homes.

As of December 15, 2024:

30-year amortizations will be available for all first-time home buyers, regardless of whether they have an insured mortgage. These extended amortizations are also available for any purchase of new construction.
The maximum purchase price for an insured mortgage (where less than 20% down is paid) will be increased to $1.5 million, from the current $1 million.

These are some of the most impactful mortgage reforms announced since 2012, and are anticipated to increase first-time home buyers’ affordability and access to the housing market.

Learn more about these new mortgage rule changes on the Ratehub.ca blog

Canadian mortgage affordability update in October 2024

In August 2024 – the latest month analyzed by Ratehub.ca’s Affordability Report – home affordability improved across many Canadian markets as mortgage rates declined. Following a series of rate cuts by the Bank of Canada, variable mortgage rates saw downward pressure, offering some relief to prospective home buyers.

According to the data, 12 of 13 major Canadian housing markets experienced better affordability as borrowing costs fell and home prices softened. In Toronto, the required income to buy a home decreased by $4,850, driven by a $15,100 drop in the average home price. Meanwhile, markets like Victoria and Vancouver also saw a modest improvement in affordability.

Variable mortgage rates, tied to the Bank of Canada's overnight lending rate, fell as the central bank reduced its target rate consecutively in June and July 2024. While variable rates remain higher than their historical lows, further rate cuts are expected, which could continue to improve affordability conditions across Canada.

In addition to the rate cuts, newly introduced mortgage qualification rules are set to further enhance affordability for first-time home buyers. These changes include raising the insured mortgage purchase price cap to $1.5 million and extending amortization periods to 30 years, significantly lowering the barrier to entry in Canada’s expensive housing market.

September 4, 2024 Bank of Canada announcement update

On September 4 2024, the Bank of Canada lowered its target for the overnight rate by -0.25%, taking it from 4.5% to 4.25%. This marks the third consecutive rate cut implemented by the Bank since March 2020, following two quarter-point cuts in June and July.

The Bank of Canada indicated that the ongoing decline of inflation drove its decision to cut its benchmark rate. July’s Consumer Price Index (CPI) came in at 2.5%, in line with expectations, while inflation has been declining in the United States and elsewhere as well.
This is yet more good news that Canadians with variable-rate mortgages and home equity lines of credit (HELOCs) have been waiting for, as their rates and payments will finally begin to decrease.
Fixed mortgage rates are not tied directly to the Bank of Canada’s rate decisions, but rather to the bond market. In anticipation of a potential rate cut, however, some lenders had already begun to lower their fixed mortgage rates. Now that the rate cut is official, we can expect more lenders to follow suit.
It will be interesting to see whether this announcement has a significant impact on the Canadian housing market, which has been rather lacklustre for much of 2024. This cumulative 75-basis-point reduction could start to incentivize buyers to return to the market.

Best 5-year variable mortgage rates +

Rate	Term	Type	Provider
5.30%	5 years	Variable	Canadian Lender
5.45%	5 years	Variable	Canwise
5.50%	5 years	Variable	Big 6 Bank
5.50%	5 years	Variable	First National
5.55%	5 years	Variable	Equitable Bank

5-year variable mortgage rates: Quick facts

Variable mortgage rates fluctuate with the prime lending rate.
Variable rates are typically stated as "prime plus or minus a percentage".
Some 5.36% of all mortgage requests made to Ratehub.ca from January - December 2023 were for 5-year variable-rate mortgages.
5-year fixed mortgage rates are driven by 5-year government bond yields.
23% of consumers opted for a variable-rate mortgage in 2024, down from 27% in 2023. (Source: 2024 CMHC Mortgage Consumer Survey)

Historical 5-year variable mortgage rates

Checking historical mortgage rates is a great way to properly understand which mortgage terms attract lower rates and whether rates are especially high or low at any given moment. Here are the lowest 5-year variable rates of the year in Canada for the last several years, compared to several other types of mortgage rates.

Source: Ratehub Historical Rate Chart

The popularity of 5-year variable mortgage rates

Although fixed-rate mortgages are more popular, according to Mortgage Professionals Canada, 25% of Canadian mortgage-holders had variable-rate mortgages at the end of 2022, making it the second most popular type of mortgage.

Historically, fixed rates are generally more popular, however, in the wake of the COVID-19 pandemic, the Bank of Canada cut its target overnight lending rate in March 2020, which caused the prime rate to go down. As a result, variable-rate mortgages experienced a surge in popularity; as mentioned above, roughly 25% of all mortgages in Canada at the end of 2022 were variable-rate mortgages, in contrast to 20% in 2019. However, as variable-rate mortgages have climbed to rates significantly higher than fixed-rate mortgages in the wake of multiple Bank of Canada rate hikes over the course of 2022, their popularity has waned considerably in 2023. While some 26% of all rate inquiries to Ratehub.ca in 2022 were for 5-year variable rates, they accounted for just 5.36% of all rate requests to Ratehub in 2023. Moreover, according to the 2024 CMHC Mortgage Consumer Survey, 23% of consumers opted for a variable-rate mortgage in 2024 (down from 27% in 2023). The table below, sourced from the same survey, shows the popularity of fixed-rate mortgages in 2024 among the four main categories of people who contracted mortgages.

First-time home buyers	Repeat buyers	Renewers	Refinancers
20%	21%	22%	28%

A 5-year mortgage term is the most popular duration. It sits right in the middle of available mortgage term lengths, between one and 10 years, and, thus, its popularity reflects a risk-neutral average. It also tends to be heavily promoted by major lenders. A further breakdown of mortgage terms shows that about 80% of mortgages have terms of five years or less.

What drives changes in 5-year variable mortgage rates?

As previously mentioned, the 5-year variable mortgage rate will fluctuate with any movements in the prime lending rate, which is the rate at which banks lend to their best and most credit-worthy customers. The variable mortgage rate is typically stated as prime plus/minus a percentage discount/premium.

Canada’s prime rate is influenced primarily by economic conditions. The Bank of Canada adjusts it depending on the state of the economy, determined by various factors in employment, manufacturing, and exports. Together, these shape the inflation rate. When inflation is high, the Bank of Canada must act to avert an over-stimulated economy. They will increase the prime rate to make the act of borrowing money more expensive.

Conversely, in cases where inflation is low, the Bank of Canada will decrease the prime rate to stimulate the economy and improve the attractiveness of borrowing. The discount/premium on the prime rate applied to the variable mortgage rate is set by the banks, based on their rate strategy and desired market share.

See today's best mortgage rates

Compare current mortgage rates across the Big 5 Banks and top Canadian lenders. Take 2 minutes to answer a few questions and discover the lowest rates available to you.

3.99%

Best fixed rate in Canada

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The bottom line: Should you get a 5-year variable rate?

As long as you're comfortable with risk and understand that variable rates can fluctuate throughout your term, then a 5-year variable rate is a reasonable choice. Since variable rates do have the inherent risk of rate increases, make sure you have enough money in your budget to cover a higher mortgage payment if rates increase.

If you're still not sure about what mortgage product is right for you, it's a good idea to speak to a mortgage broker. Consultations are free, and you'll leave with expert advice, personalized to you.

For more information, check out these helpful pages!

Ratehub.ca education centre

Buying
So you've made the decision to buy a new home! The first step is to figure out how much you can afford to spend.
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Renewing
If your current mortgage is up within four months, now's the time when most lenders will allow you to start the early mortgage renewal process.
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Refinancing
When deciding whether or not, you should refinance your current mortgage and replace it with a new one, there are a few important things to consider.
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