5-Year Mortgage Rates
\n\n\n\nFive-year mortgage terms are the most popular choice for Canadian homeowners—and for good reason. They offer a solid mix of rate stability, predictable budgeting, and long-term planning flexibility. A 5-year term allows borrowers to lock in a rate for a substantial period, which can provide peace of mind in times of economic uncertainty. In this article, we explore everything you need to know about 5-year mortgage rates in Canada: current trends, ideal borrower profiles, strategies for securing the best rate, and how this term compares to others. Whether you’re renewing, buying, or refinancing, this guide will help you make an informed decision.
\n\n\n\nWhat is a 5-Year Mortgage?
\n\n\n\nA 5-year mortgage is a home loan where the interest rate and contract terms are fixed or variable for a five-year period. It’s the standard term offered by most lenders and is favored by borrowers who want to reduce the frequency of renewals while enjoying stable payments. Once the five years are up, borrowers can renew their mortgage or switch lenders without penalty.
\n\n\n\nFive-year mortgages come in two primary formats: fixed-rate and variable-rate. Fixed-rate 5-year mortgages guarantee the same monthly payments for the full term, while variable-rate versions can fluctuate based on changes to the lender’s prime rate. Most homeowners choose fixed rates for the security and ease of planning.
\n\n\n\nThis term is particularly useful for long-term planning. Whether you’re settling into your first home, starting a family, or building equity, a 5-year mortgage allows you to manage your finances with fewer surprises. However, this longer term can come with drawbacks—namely, if interest rates drop significantly, you could be stuck with a higher rate unless you refinance, which may involve penalties.
\n\n\n\nCurrent 5-Year Mortgage Rate Trends in Canada (2025)
\n\n\n\nIn 2025, average 5-year fixed mortgage rates in Canada range from 4.75% to 5.2%. Variable-rate 5-year terms may start slightly lower but carry more volatility. The spread between fixed and variable options has narrowed, making fixed rates increasingly appealing to risk-averse borrowers.
\n\n\n\nDespite a slight cooling of inflation, the Bank of Canada has kept its policy interest rate high, which continues to influence fixed-rate mortgages via bond yields. Many economists believe we are near the peak of the rate cycle, with potential cuts on the horizon, possibly starting in late 2025 or early 2026.
\n\n\n\nBecause of this uncertainty, many lenders are offering promotional fixed 5-year terms, particularly to borrowers with strong credit and high down payments. These promotions may be tied to other products or services, such as opening an account or bundling with home insurance.
\n\n\n\nWho Should Consider a 5-Year Mortgage?
\n\n\n\nA 5-year mortgage is ideal for borrowers who want stability and minimal hassle. If you plan to stay in your home for at least five years, want predictable payments, and prefer to avoid renewing often, this term is likely the best fit.
\n\n\n\nThis option is especially attractive to first-time homebuyers who need the stability to build a household budget, growing families who value consistency, and homeowners with limited risk tolerance. Retirees or anyone on a fixed income also benefit from the predictable costs that a 5-year term provides.
\n\n\n\nReal estate investors with buy-and-hold strategies frequently choose 5-year fixed mortgages to reduce cash flow surprises. And if rates are expected to rise over the next few years, locking in now can shield you from future increases.
\n\n\n\nHowever, borrowers who expect to move, refinance, or sell their property within the next few years may want to explore shorter terms or ensure their 5-year mortgage includes flexible prepayment options to avoid penalties.
\n\n\n\nHow to Get the Best 5-Year Mortgage Rates
\n\n\n\nTo get the lowest 5-year mortgage rate, start by improving your credit profile. Pay off outstanding debts, avoid missed payments, and reduce your credit utilization to under 30% of your limit. Lenders offer their best rates to borrowers with credit scores above 720.
\n\n\n\nNext, reduce your debt-to-income ratio. Lenders are more likely to approve lower rates if you have fewer financial obligations. Increase your down payment if possible, since loans with less than 20% down typically require mortgage default insurance, which adds to your costs.
\n\n\n\nUse online comparison tools to view rates across banks, credit unions, and non-traditional lenders. Don't overlook mortgage brokers, who can access lender-exclusive rates and help you compare total mortgage packages—including fees, prepayment privileges, and renewal terms.
\n\n\n\nTiming matters, too. Rates can fluctuate monthly, so if you find a great offer, ask for a rate hold—many lenders will lock in a rate for 90 to 120 days.
\n\n\n\nComparison: Fixed vs. Variable 5-Year Mortgage Rates
\n\n\n\nFive-year terms are available as both fixed and variable-rate mortgages. Fixed-rate options lock in your interest rate for the full five years, offering steady monthly payments. This is great for peace of mind, especially if you’re budgeting carefully or are new to homeownership.
\n\n\n\nVariable-rate mortgages are tied to the lender’s prime rate, which changes when the Bank of Canada adjusts its benchmark rate. When rates fall, your mortgage interest may decrease—but when they rise, so do your payments. Some variable mortgages have fixed payments, but your amortization schedule changes depending on the rate.
\n\n\n\nIn the current environment, many borrowers are choosing fixed rates due to economic uncertainty. However, if you have flexibility in your budget and believe rates will drop significantly, a variable-rate mortgage could offer long-term savings.
\n\n\n\nBreaking Down the Costs of a 5-Year Mortgage
\n\n\n\nWhile the interest rate is a major factor, it’s important to account for the total cost of your mortgage over five years.
\n\n\n\nLet’s say you have a $400,000 mortgage at a 5.0% fixed interest rate. Over five years, you may pay approximately $95,000–$100,000 in interest, depending on your amortization period and payment frequency. Monthly payments could range from $2,200 to $2,800.
\n\n\n\nOther costs may include:
\n\n\n\n- \n
- Legal fees: $1,000–$2,500 \n\n\n\n
- Appraisal and inspection fees: $300–$600 \n\n\n\n
- Title insurance: $250–$400 \n\n\n\n
- Mortgage default insurance (if down payment <20%) \n\n\n\n
- Discharge or transfer fees if switching lenders after 5 years \n\n\n\n
- Prepayment penalties if you break your mortgage early \n
Choosing the right mortgage involves looking at the full financial picture—not just the rate.
\n\n\n\nRenewing Your 5-Year Mortgage
\n\n\n\nWhen your 5-year term ends, your lender will offer you a renewal. Don’t accept it automatically. Start reviewing your renewal options 3–4 months ahead of time. Compare market rates, speak to brokers, and consider whether your financial goals have changed.
\n\n\n\nRenewal is a perfect time to:
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- Renegotiate your rate or switch to a new lender \n\n\n\n
- Adjust your amortization schedule \n\n\n\n
- Make a lump sum prepayment if your mortgage allows \n
If your credit profile has improved or you now qualify for a better rate, take advantage of the renewal to save money.
\n\n\n\nSwitching lenders might involve legal or administrative fees, but many lenders cover these to earn your business. Ask about these incentives.
\n\n\n\nIs a 5-Year Mortgage Right, or Should You Pick a Shorter Mortgage?
\n\n\n\nFive-year mortgages are right for borrowers who value predictability, stability, and low renewal frequency. But they’re not ideal for everyone.
\n\n\n\nChoose a 5-year mortgage if:
\n\n\n\n- \n
- You plan to stay in your home for at least 5 years \n\n\n\n
- You want to lock in today’s rate and avoid future increases \n\n\n\n
- You’re on a fixed income or prefer budgeting certainty \n
Choose a shorter term if:
\n\n\n\n- \n
- You expect to sell, move, or refinance soon \n\n\n\n
- You think interest rates will decline significantly in the next 1–3 years \n\n\n\n
- You’re comfortable renegotiating more frequently \n
The choice depends on your financial goals, risk tolerance, and life plans.
\n\n\n\nFAQs: Common Questions about 5-Year Mortgages
\n\n\n\nCan I break my 5-year mortgage early?
Yes, but you’ll likely pay a penalty—often the greater of three months’ interest or the interest rate differential (IRD).
Are 5-year rates better than shorter-term rates?
Sometimes. 5-year fixed rates can be lower than short-term ones during periods of rate uncertainty.
Can I renew with a different lender?
Yes. Renewal is a great time to compare offers and switch if a better deal is available.
Is a 5-year variable mortgage risky?
It can be if rates rise unexpectedly. Make sure your budget has room to handle higher payments.
Do I need to requalify at renewal?
If you stay with your current lender, you generally don’t need to requalify. If switching lenders, you will.
Expert Predictions on Future 5-Year Mortgage Rates
\n\n\n\nExperts anticipate a gradual rate drop in late 2025 or early 2026 if inflation continues to slow. However, geopolitical events or economic instability could delay cuts. Fixed-rate borrowers can enjoy peace of mind, while variable-rate borrowers should monitor the Bank of Canada closely.
\n\n\n\nStay in touch with your mortgage advisor or broker and be ready to act if refinancing opportunities emerge.
\n\n\n\nUse Dollarwise to Compare 5-Year Mortgage Rates
\n\n\n\nA 5-year mortgage is a dependable, stable choice for Canadian homeowners. It allows for steady planning, fewer renewals, and long-term cost control. While it may not offer the flexibility of shorter terms, it’s a solid foundation for most buyers and a reliable tool for financial planning.
\n\n\n\nEvaluate your future plans, compare rates and conditions, and choose the term that gives you confidence in your housing costs. With a little research and the right advice, a 5-year mortgage can be a smart, secure step forward.
\n\n\n\nReady to find the best 5-year mortgage rates in Canada? Use our comparison tool at the top of the page to browse real-time offers from top lenders. For personalized recommendations, speak with a licensed mortgage broker today.
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