5-year fixed mortgage rates

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5-year fixed

5-year fixed rates at a glance

Num
6.79%
5.14%
5.14%
5.15%
5.14%

This table was last updated on Feb 27, 2024 using data available on each respective institution’s website.

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Unlocking the Best 5-Year Fixed Mortgage Rates for Homebuyers

What is a 5-Year Fixed Mortgage?

A 5-year fixed mortgage is one of Canada's most popular mortgage products and for a good reason. When you opt for this type of mortgage, you’re essentially locking in your interest rate for five years. But what does this mean for you as a homeowner or potential homebuyer?

It is a mortgage product whose interest remains constant for the first five years, regardless of market fluctuations. This means your monthly mortgage payments will stay the same during this period, providing stability and predictability in your financial planning.

Exploring the 5-Year Fixed Mortgage Rates in Canada

The mortgage landscape can often seem intricate, with rates perpetually in flux. To offer clarity, let's examine the prevailing state of 5-year fixed mortgage rates in the nation.

A Glimpse at Present Rates

Venturing into today's landscape, the prevailing 5-year fixed mortgage rate across Canada, as determined by a collection of prominent lenders, serves as a reflection of the ongoing economic narrative. This rate, while illustrative, emerges from a confluence of elements such as economic markers, strategic moves by the Bank of Canada, and overarching global fiscal trends, all converging to define the rate accessible to borrowers.

Contrasting with Alternate Mortgage Rates

When set against the 3-year mortgage terms, which have seen a surge in recent times, the 5-year fixed rates continue to hold their ground. Traditionally, the 5-year span has been the go-to for Canadians, ensuring consistent payments and a safeguard against potential rate hikes. Yet, the emerging appeal of the 3-year term has reinforced the significance of the 5-year fixed rate for a broad spectrum of borrowers.

Statistics from the Government of Canada highlight a discernible trajectory in the Residential Mortgage Funds Advanced. The juxtaposition of fixed and variable rates, particularly in the realm of uninsured mortgages, underscores the sustained preference for fixed-rate mortgages, with the 5-year duration being a predominant pick.

Provincial Discrepancies

It's pivotal to recognize that optimal interest rates can vary across provinces. Factors such as regional economic health, legislative frameworks, and the balance of demand and supply influence these disparities. For example, real estate hotspots like British Columbia and Ontario might experience distinct rate patterns compared to regions with more tempered or consistent market movements.

Historical Dive: A Look Back at 5-Year Fixed Rates

The 5-year fixed mortgage rate, a stalwart in the Canadian housing market, has seen its fair share of ebbs and flows. To truly appreciate its current standing, it's essential to trace its journey over the years.

A Decade in Retrospect

  • Over the past ten years, the 5-year fixed rates have experienced significant fluctuations, reflecting the broader economic and policy shifts in Canada and globally.
  • For instance, in the early 2010s, the rate hovered around the 4% mark. However, by the mid-2010s, influenced by global economic conditions and domestic policy changes, it saw a dip, reaching lows of around 2.5%.
  • The latter part of the decade and the early 2020s witnessed a gradual climb, with the rate currently standing at an average of 6.26% across major lenders.

Historical Milestones

  • One of the most notable moments in the history of the 5-year fixed rate was in the early 1980s when Canada, like much of the world, grappled with soaring inflation. During this period, the 5-year fixed rate reached an astonishing high of over 20%.
  • Conversely, the record low for this rate was observed in 2020, with some lenders offering rates slightly below 2%, a reflection of the economic challenges and policy responses to the global pandemic.

Popularity Contest: Why Canadians Love the 5-Year Fixed Rate

The 5-year fixed mortgage rate isn't just another option in the vast mortgage landscape of Canada; it's a favorite. Let's explore the reasons behind its enduring appeal among Canadians.

A Staple in the Canadian Mortgage Scene

  • Consistency in Numbers: The 5-year fixed rate has consistently been a top choice for Canadians. About 69% of mortgage holders have fixed-rate mortgages, according to Mortgage Professionals Canada's semi-annual report on the housing market released in March 2022.
  • Historical Preference: This preference isn't new. Over the past few decades, Canadians have shown a consistent inclination towards the predictability and stability offered by the 5-year fixed rate. Even during periods of economic uncertainty, this term has remained a reliable choice for many.

The Allure of Predictability

  • Budgeting with Confidence: One of the primary reasons for the 5-year fixed rate's popularity is the financial predictability it offers. Homeowners can budget with confidence, knowing that their mortgage payments will remain unchanged for the next five years, regardless of market fluctuations.
  • Protection Against Rate Hikes: With a fixed rate, homeowners are insulated from potential interest rate hikes, ensuring that their monthly payments remain consistent throughout the term.

Comparative Appeal

When compared to variable rates, the 5-year fixed rate often emerges as a more attractive option for those seeking stability. While variable rates can offer initial savings, they come with the uncertainty of rate fluctuations. The 5-year fixed rate, on the other hand, provides a middle ground – a balance of competitive rates and payment consistency.

Regional Trends

While the 5-year fixed rate is popular nationwide, there are regional variations in its adoption. For instance, in provinces with rapidly growing real estate markets like British Columbia and Ontario, the preference for this rate might be even more pronounced due to the desire for payment stability in the face of rising property prices.

Strategic Considerations: 3-Year or 5-Year Fixed Rate?

  • Anticipating Future Rates: With experts postulating a potential decline in mortgage rates in the forthcoming years, 2024 and 2025, the 3-year fixed rate emerges as a strategic choice for those seeking to re-enter the market sooner.
  • Balancing Stability and Flexibility: While the 5-year fixed rate offers extended stability, the 3-year fixed rate provides a balanced blend of stability and the flexibility to reassess and modify your mortgage strategy in a shorter timeframe.
  • Aligning with Personal Circumstances: Your circumstances, plans, and financial health are pivotal in determining whether a 3-year or 5-year fixed rate is optimal for your scenario.

The 5-year fixed mortgage rate's popularity is a testament to its balanced offering of competitive rates and financial predictability. For Canadians, it represents more than just a mortgage choice; it's a reflection of a collective desire for stability and foresight in homeownership.

Navigating Your Mortgage Journey

In the ever-evolving landscape of Canadian mortgages, making informed decisions is paramount. Whether you're drawn to the stability of a 5-year fixed rate or the potential savings of a variable rate, understanding the nuances is key. With an average 5-year fixed rate of 6.26% and a myriad of factors shaping the market, it's essential to have a trusted partner by your side. 

Enter Pine. As a direct mortgage and lender company, Pine is committed to guiding you through the complexities of the mortgage world. Our expertise, transparency, and dedication ensure you're equipped with the best insights and rates tailored to your needs. As you embark on or continue your homeownership journey, let Pine be your compass, ensuring a smooth and informed path forward.

Mortgage Statement

Calculation results and mortgage rates shown are approximations and dependent on the data you have provided. They are for illustration purposes only and are not intended to provide financial advice. Pine does not make any representations or warranties with respect to the calculation results. Rates quoted are not considered as rate guarantees. Pine may offer different rates when you apply for your mortgage if any of the provided details differ, if rates have changed. In some instances, rates may also vary based on your credit or payment history. Additional terms and conditions may apply.

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