Best Mortgage Rates In Canada For December 2024

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 in Canada, which includes banks, credit unions and online lenders. Lenders that didn’t provide their mortgage rates or didn’t operate in four or more provinces or territories across Canada were not eligible for review.

Our conventional rates (rates that are uninsured) 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 scored based on the following factors:

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

Though these rates are accurate at the time of publication, they are intended only to provide a ballpark figure and sample of the rates a lender may offer in that province for that particular mortgage term. That does not mean that you will qualify for the above rates or that the lender in question hasn’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.

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 December 12, 2024, the 5-year benchmark bond yield is 2.898%, down 34.68 basis points (or 0.3468%) from one year ago.

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 5.45%, though some banks may post a different rate. For example, TD Bank’s prime mortgage rate is currently 5.60%. 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%. Most recently, on December 11, 2024, the Bank cut rates by another 50 basis points to 3.25%. 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 (October 2024) Monthly Housing Market Report from the Canadian Real Estate Association (CREA), home sales edged up 1.99% on a month-over-month basis in September 2024, reaching their highest level since July 2023. This increase was led by the Greater Toronto Area, Hamilton-Burlington, Montreal, Quebec City, Greater Vancouver and Victoria.

“Sales gains are now three for three in the months following interest rate cuts, which is a trend even though the increases weren’t headline-grabbing,” noted Shaun Cathcart, CREA’s Senior Economist. “That said, with the pace of rate cuts now expected to be much faster than previously thought, it’s possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year.”

At the end of September 2024, 185,427 properties were listed for sale nationwide on MLS. This is up 16.8% from a year earlier but still below historical averages of around 200,000 listings for this time of the year. The number of new listings jumped 4.9% month-over month, as sellers listed properties in larger-than-usual numbers early in the month.

The national sales-to-new listings ratio cooled slightly to 51.3%, down from 52.8% in August and 53.5% in June. The long-term average is 55%. (A sales-to-new listings ratio between 45% and 65% is consistent with balanced market conditions, with a ratio above 65% indicating a seller’s market and a ratio below 45% indicating a buyer’s market.)

“The beginning of September saw a burst of new supply for buyers to choose from before things generally quiet down for the winter,” said James Mabey, CREA Chair. “While some buyers may choose to take advantage, others may be inclined to wait as the bulk of future rate cuts from the Bank of Canada are now expected to show up in a matter of months as opposed to years.”

The actual national average home price was $669,630 in September 2024, up 2.1% from September 2023.

CREA’s next monthly update will be published on November 15, 2024.

At its most recent rate announcement on December 11, 2024, the Bank of Canada (BoC) supersized its key interest rate cut once again by 50 basis points to 3.25%, its fifth consecutive rate cut. The BoC was widely expected to continue rate cuts with this announcement.

“Monetary policy has worked to bring inflation back to the 2% target. Our policy focus now is to keep inflation close to target,”  said BoC Governor Tiff Macklem in his press conference opening statement. “With inflation back to target, we have cut the policy rate by 50 basis points at each of the last two decisions because monetary policy no longer needs to be clearly in restrictive territory. We want to see growth pick up to absorb the unused capacity in the economy and keep inflation close to 2%.”

Notably, while this second jumbo rate cut was expected, largely on weaker-than-expected economic activity, the central bank also signalled Canadians should expect more gradual easing in 2025.

Headline inflation has eased from 8.1% in June 2022 to 2.0% in October 2024 and now sits within the central bank’s 1% to 3% target. To maintain target, household spending and business investment need to improve, and the upward pressure from shelter and other services needs to continue softening.

The central bank reiterated its intention to support growth while still keeping inflation close to the 2% target, but did not share any certainty on the speed or timing of future rate cuts.

“The Governing Council has reduced the policy rate substantially since June, and those cuts will be working their way through the economy. Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time,” said Macklem. ”In other words, with the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected. Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook.”

The next rate announcement is on January 29, 2025.

Related: The Bank of Canada Cuts Key Interest Rate to 3.25%

Canada’s inflation rate came in slightly lower than expected, slowing to 1.9% in November. The deceleration year-over-year was broad-based, driven mainly by lower mortgage interest rate costs, travel tour prices and seasonal factors including lower gasoline prices and Black Friday sales. 

However, positive headline inflation figures were tempered by sticky core inflation measures, namely CPI-trim and median, which were up 0.3% month-over- month and remained unchanged year-over-year at 2.7% and 2.6%, respectively.

Prices for rent accelerated in November, up 7.7% over 7.6% in October, with the hottest markets in Ontario (+7.4%), Manitoba (7.9%) and Nova Scotia (+6.4%). Mortgage interest costs softened again this month to 13.2% after rising 14.7% in October. Mortgage costs and rent continue to put the most significant upward pressure on the all-items CPI in November, though the former should continue to moderate following interest rate cuts by the Bank of Canada.

Statistics Canada will release the December CPI figures on January 21, 2025. 

Related: Inflation Rate Slows To 1.9% In November

Here are the posted rates by the major chartered banks for conventional 5-year, 3-year and 1-year fixed mortgages. Keep in mind there may be better rates available at other lenders.

Open vs. Closed Mortgage

An open mortgage offers the flexibility to prepay the loan at any time without penalties. This means you can make additional payments or pay off the entire mortgage before the term ends. On the other hand, a closed mortgage has restrictions on prepayment privileges. You’ll also generally receive a lower interest rate with a closed mortgage.

Fixed-Rate Mortgages

A fixed-rate mortgage has a consistent interest rate throughout the loan term, providing predictability and stability. Your interest rate will remain unchanged regardless of market or economic conditions. Fixed-rate mortgages are popular for borrowers who believe that interest rates will increase.

Related: Best 5-year fixed mortgage rate and 10-year fixed mortgage rates

Variable Mortgages

If your bank’s benchmark rate adjusts during your term, so will your variable mortgage rate. Research from the Bank of Canada suggests that three-quarters of variable-rate mortgages in 2022 had fixed payments. This means a changing interest rate won’t affect your monthly payment, but will adjust the amount of principal you pay off every month. A rising interest rate means each payment contributes more to interest and less to paying off your loan balance.

This fixed payment structure caused the trigger rate debacle, which is the rate at which none of your mortgage payments contribute to the loan principal. Instead, your entire monthly mortgage payment is directed towards interest. “On top of this, sometimes the payments don’t even cover interest and interest is capped to the principal, so when the mortgage is up for renewal you owe more than you started with,” notes Julia Bernier, a licensed independent mortgage agent (level two) with JC Mortgages in Kitchener, Ont.

Is a Variable Rate Better?

A variable rate mortgage is better if you expect interest rates to decrease during your term. If rates drop, you’ll pay off your mortgage faster since more of each payment contributes to the loan principal. However, a fixed-rate mortgage is better if you expect interest rates to increase during your term, or if you want the stability of knowing your payments won’t change, notes Bernier.

The below are the most common factors that affect what interest rate you receive for your mortgage and therefore, how much you pay.

The Type of Mortgage (Refinance, Purchase or Renewal)

Different mortgage types have varying risk profiles. For example, refinancing your mortgage generally increases your interest rate. In contrast, purchase mortgages typically have lower interest rates than refinancing because a purchase is typically an insurable transaction, which is less risky to a bank. “A refinance is not insurable at all so the bank doesn’t have the extra security of the default insurers if the borrower is to default,” notes Bernier. Your renewal interest rate varies with your creditworthiness and market conditions at the time of renewal.

Down Payment

Your mortgage interest rate decreases as the down payment fluctuates. Although counter-intuitive, the Canada Mortgage and Housing Corporation (CMHC) mandates mortgage default insurance for down payments below 20%. While you’ll receive the lowest mortgage rates with CMHC coverage, there are separate fees that can increase your cost of borrowing. Likewise, higher down payments reduce lender risk and your interest rate. Interestingly, lenders have the highest risk with a 20% down payment.

Property Type

Lenders may differentiate between freehold, leasehold and cooperative properties. The ownership structure of each option varies, adjusting lender risk. For example, some lenders charge higher interest rates for cooperative housing because the loan is not secured by a hard asset. Instead, you own shares in a housing corporation that owns the building.

Amortization Period

Extended amortization periods, which are above 25 years, generally have higher interest rates compared to shorter ones. “If you have a 10-year amortization, you are not getting a better rate than a 25-year amortization,” notes Berier. “But if you have a 26- to  30-year amortization,  it may be higher than 25 or less.”

Even if your interest rate doesn’t increase, you’ll end up paying more lifetime interest with a longer amortization period. In contrast, decreasing your amortization will reduce lifetime interest paid, but will increase your monthly mortgage payment.

Mortgage Default Insurance

If your down payment is less than 20% of the property’s purchase price, you’ll be required to obtain mortgage default insurance. This insurance protects the lender in case of default. As such, lenders will charge a lower interest rate if you have default insurance. However, there are separate fees that affect your total cost of borrowing.

Payment Frequency

You can reduce the lifetime interest paid by increasing your payment frequency. This is because you will pay down your mortgage faster. However, closed mortgages have penalties for exceeding annual prepayment thresholds.

Property Location

Provinces have varying market conditions and economic factors that can impact interest rates. For example, provinces with more lender competition and robust consumer profiles will likely see decreased interest rates.

Other Mortgage Costs

In addition to the interest rate, other costs are associated with obtaining a mortgage, such as origination, appraisal and legal fees. These costs can vary among lenders and impact your mortgage’s overall affordability. Your total cost of borrowing is reflected in the mortgage APR.

The below are the most common factors that lenders look at when qualifying you for a mortgage.

Employment Status

Lenders prefer borrowers with stable income, such as full-time employment. Self-employed individuals may face additional requirements to demonstrate income stability.

Credit Score

A higher credit score indicates responsible financial behaviour, increasing your chances of qualifying for a mortgage and securing favourable interest rates. The minimum credit score in Canada to receive a standard mortgage is around 650.

The Ability to Pass a Mortgage Stress Test

Borrowers in Canada must pass a mortgage stress test to ensure affordability, even if interest rates rise. The test assesses their ability to make mortgage payments at a higher interest rate than the one they applied for. The stress test in Canada requires you to meet debt service ratio requirements with a higher interest rate of 5.25% or your mortgage rate + 2%.

Lower Debt Service Ratios

Lenders analyze your ability to manage mortgage payments by calculating your Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS). Lower ratios indicate a lower percentage of income used to cover debts, improving mortgage qualification prospects. Canada’s maximum GDS and TDS ratios are generally 39% and 44%, respectively.

Saving a Larger Down Payment

A larger down payment positively impacts mortgage qualification. It reduces monthly mortgage payments, decreases debt service ratios and helps you pass the stress test. Furthermore, it may result in more favourable interest rates and mortgage terms.

Your mortgage amortization is broken into various terms. In Canada, the standard term is five years. You’ll need to renew your mortgage contract at the end of your term. This is when you can renegotiate your mortgage terms with your existing lender or sign a new contract with a new one.

Short-Term Mortgages

Short-term mortgages have a duration lower than five years. They can help you renew at a lower rate if you expect your creditworthiness or the market interest rates to improve shortly. However, it’s important to note that short-term mortgages require more frequent renewal, which can be a disadvantage if interest rates rise significantly during the renewal period.

Long-Term Mortgages

Long-term mortgages have a duration exceeding five years. They are great to lock in a stable rate for the foreseeable future. However, you can be vulnerable if rates fall significantly below your locked-in rate. As such, a long-term open mortgage combines the benefits of a predictable rate with the flexibility to replace it.

These are the main factors that go into determining what mortgage rates are going to be.

The Bank of Canada’s Overnight Rate

When the Bank of Canada raises or lowers its overnight rate, it affects the interest rates charged on loans, including mortgages. If the overnight rate increases, mortgage rates tend to rise as well.

The Government Bond Market

Government bond yields serve as a benchmark for other interest rates, including mortgage rates. When bond yields rise, mortgage rates generally also increase.

As of writing, the average mortgage rates from our selected lenders are as follows:

3-year variable: 5.46%
3-year fixed: 5.20%
5-year variable: 4.96%
5-year fixed: 4.81%
10-year fixed: 6.52%

Rates as of December 12, 2024

Our chosen lenders for the best mortgage rates in Canada include nesto Inc., Dominion Lending Centres (broker), The Mortgage Centre (broker), B2B Bank Laurentian Bank and BMO. We scored lenders based on their interest rates, timeliness, prepayment privileges, penalty calculation type and availability of discounted rates.

Mortgage prepayment penalties only apply to closed mortgages. Open mortgages have the ability to be paid in full at any time. A prepayment penalty happens if you exceed your monthly payment or go above the percentage that includes your annual prepayment privileges (the amount you can pay above your monthly payment without paying a penalty).

Fixed-Rate Mortgage Penalty Interest Rate

For fixed-rate mortgage penalties, lenders generally charge the higher of three months’ interest, or the interest rate differential (IRD). Lenders commonly calculate the IRD using their posted rates, which can be much higher than your actual rate. As such, you may end up paying more interest in the short term.

Variable-Rate Mortgage Penalty Interest Rate

For variable-rate mortgages, lenders generally charge a penalty of three months’ interest. The interest rate used to calculate the penalty varies by lender, but it is typically your mortgage interest rate or their current prime rate.

A mortgage broker can provide access to a broader range of lenders and mortgage products than a single bank. This can help you save time and secure a better rate. However, comparing offers from multiple lenders is crucial, as commissions from particular lenders can incentivize brokers to promote certain lenders over others.