DirectionFreeNews | The best mortgage rates in Canada right now

Key Points

Fixed mortgage rates have eased to about 4.5%-5.0% at major banks, with some smaller lenders offering 4.3%.
Variable rates remain near 6.0%-6.5%, tied to the Bank of Canada's 5% key rate.
The gap between fixed and variable rates has shrunk, making fixed terms more attractive for payment certainty.
The Bank of Canada's upcoming rate decisions will determine whether variable rates fall later this year.

Background History

Mortgage rates in Canada have risen sharply since early 2022, when the Bank of Canada began hiking interest rates to combat high inflation. The central bank raised its key rate from 0.25% to 5% by July 2023, the fastest tightening cycle in decades. This pushed variable mortgage rates above 6% and five-year fixed rates above 5.5% for most of 2023. By early 2024, bond yields started to ease on hopes of rate cuts, allowing lenders to reduce fixed rates slightly. Housing affordability remains a major concern, with the average home price still elevated despite cooler sales.

Mortgage rates in Canada have climbed significantly over the past two years, but a slight easing in bond yields has led some lenders to trim their fixed-rate offerings. Borrowers looking for a new mortgage or renewal today face a mixed picture: fixed rates on five-year terms have dipped to around 4.5% to 5.0% at major banks, while variable rates remain higher at about 6.0% to 6.5%, tied to the Bank of Canada's key lending rate, which has stayed at 5% since July 2023. The difference between fixed and variable rates has narrowed, making fixed terms more appealing for those who prioritize monthly payment stability. However, the best available rates often come from smaller lenders or online brokers, where five-year fixed rates can be as low as 4.3%. The Bank of Canada's next rate decision in March will be closely watched: if inflation continues to cool, the central bank may begin cutting rates later this year, which would affect variable-rate borrowers directly and could push fixed rates even lower. For now, the market is offering a rare chance to lock in a fixed rate that is lower than the prevailing variable rate, but borrowers must weigh the cost of breaking a fixed term if rates drop further.