The 5-year fixed mortgage is Canada’s most popular mortgage product — roughly 60% of Canadian borrowers choose it. The challenge is that the difference between the best and worst available rates can easily be 0.50% or more, which translates to thousands of dollars over the term. Here is how to get the lowest rate.
How 5-year fixed rates work
A 5-year fixed rate means your interest rate is locked in for 5 years regardless of what happens to the Bank of Canada overnight rate, bond yields, or the broader economy. Your payment stays the same for the entire term.
| Feature | 5-Year Fixed Details |
|---|---|
| Rate locked for | 5 years |
| Payment changes during term | None — fully predictable |
| Based on | Government of Canada 5-year bond yield + lender spread |
| Who sets it | Each lender sets their own rate |
| Stress test rate | Higher of your contract rate + 2% or 5.25% (whichever is greater) |
| Most popular because | Payment certainty for 5 years, peace of mind during rate volatility |
Insured vs uninsured: why it changes your rate
The biggest factor affecting your rate is whether your mortgage is insured or uninsured:
| Type | Down Payment | Insurance | Typical Rate | Why |
|---|---|---|---|---|
| Insured | Less than 20% | CMHC/Sagen/Canada Guaranty pays lender if you default | Lower (best rates available) | Zero risk for the lender = happiest pricing |
| Insurable | 20%+ but meets insurer criteria (< $1M purchase, ≤ 25-year am) | Lender buys bulk insurance | Slightly higher (+0.05–0.15%) | Lender covers insurance cost |
| Uninsured | 20%+ but does not meet insurer criteria (> $1M, 30-year am, refinance) | No insurance | Highest conventional rate (+0.10–0.30%) | Lender carries all the risk |
Counterintuitive fact: Putting less than 20% down often gets you a lower rate than putting 20% down, because your mortgage is insured. The insurance premium (2.40–4.00% of the mortgage) costs money, but the rate savings partially offset it.
Where rates stand right now
For reference, official Bank of Canada posted rates as of August 26, 2026:
| Term | Posted Rate |
|---|---|
| 1-Year | 5.49% |
| 3-Year | 6.05% |
| 5-Year | 6.09% |
Posted/benchmark conventional mortgage rates used for stress-test purposes – not the discounted rate lenders typically offer. Always confirm current offers directly with a lender or mortgage broker. Source: Bank of Canada Valet API (series V80691333, V80691334, V80691335), as of August 26, 2026, fetched 2026-08-28.
These are posted/benchmark rates used for the stress test, not real offers. The lender figures below are typical illustrative ranges, not live quotes — discounted 5-year fixed rates generally run 1.5–2 percentage points below the posted 6.09% rate above. Rates change daily and vary by lender; verify current offers directly with a lender or mortgage broker before relying on any specific figure.
Rate comparison across lenders
Here is how rates typically compare across lender types for a 5-year fixed mortgage:
Insured rates (less than 20% down)
| Lender | Typical 5-Year Fixed Rate | Rate vs Best Available |
|---|---|---|
| Nesto | 4.44–4.54% | Best or near-best |
| First National | 4.49–4.59% | Within 0.05–0.10% of best |
| MCAP | 4.49–4.59% | Within 0.05–0.10% of best |
| RMG Mortgages | 4.54–4.64% | Within 0.10–0.15% of best |
| Desjardins | 4.59–4.69% | Within 0.15–0.20% of best |
| TD | 4.79–4.99% | +0.30–0.50% above best |
| RBC | 4.84–5.04% | +0.35–0.55% above best |
| BMO | 4.79–4.99% | +0.30–0.50% above best |
| Scotia | 4.84–5.09% | +0.35–0.60% above best |
| CIBC | 4.79–5.04% | +0.30–0.55% above best |
Rates shown are representative ranges and change frequently. Check current rates through a broker or lender.
Uninsured rates (20%+ down)
| Lender | Typical 5-Year Fixed Rate | Rate vs Best Available |
|---|---|---|
| First National | 4.64–4.74% | Best or near-best |
| MCAP | 4.64–4.79% | Within 0.05–0.15% of best |
| Nesto | 4.59–4.74% | Best or near-best |
| RMG | 4.69–4.79% | Within 0.10–0.15% of best |
| TD | 4.99–5.19% | +0.30–0.50% above best |
| RBC | 5.04–5.24% | +0.35–0.55% above best |
| BMO | 4.99–5.19% | +0.30–0.50% above best |
Rates shown are representative ranges and change frequently. Verify current offers directly with a lender or mortgage broker.
What a 0.30% rate difference actually costs
The difference between a monoline and a Big Five bank seems small — but here is what it means on a real mortgage:
| Metric | Monoline at 4.54% | Bank at 4.84% | Difference |
|---|---|---|---|
| Monthly payment ($400K, 25-year) | $2,215 | $2,281 | $66/month |
| Total interest over 5-year term | $84,200 | $88,200 | $4,000 |
| Total interest over 25-year amortization | $250,800 | $268,300 | $17,500 |
| Principal paid after 5 years | $48,700 | $47,100 | $1,600 more equity |
Over 25 years of renewals at the same differential, a 0.30% savings adds up to $17,500 in interest — before considering that the rate difference may widen at each renewal.
Beyond rate: features that save (or cost) you money
Prepayment privileges
Prepayment privileges let you pay down your mortgage faster without penalty. The more generous the privileges, the more flexibility you have.
| Lender | Annual Lump Sum | Payment Increase | Double-Up Payments |
|---|---|---|---|
| MCAP | 20% of original balance | 20% increase | Yes |
| RMG | 20% | 20% | Yes |
| First National | 15% | 15% | No |
| Nesto | 15–20% (product dependent) | 15–20% | Varies |
| TD | 15% | Up to double payment | Yes |
| RBC | 10% | 10% | Yes |
| BMO | 10% (20% on some products) | 10% | No |
| CIBC | 10% | 10% (up to double) | Yes |
| Scotia | 15% | 15% | Yes |
Why it matters: If you receive a $20,000 bonus and want to put it toward your mortgage, a lender with a 20% prepayment privilege on a $400,000 mortgage lets you apply up to $80,000 per year. A lender with only 10% caps you at $40,000.
Penalty calculations
If you break your 5-year fixed mortgage early, you pay a penalty. This is where lenders differ dramatically.
| Penalty Method | How It Works | Typical Cost on $350K Remaining |
|---|---|---|
| 3-month interest penalty | 3 months of interest on the balance | $4,200–$5,250 |
| Fair IRD (monoline) | Difference between your rate and the lender’s comparable current rate × remaining term | $3,000–$8,000 |
| Posted-rate IRD (Big Five banks) | Difference between your rate and the bank’s POSTED rate (artificially inflated) × remaining term | $12,000–$25,000+ |
This is the biggest hidden cost in Canadian mortgages. The Big Five banks use their posted rate (which is much higher than the rate they actually gave you) in the IRD calculation, inflating the penalty dramatically.
Example breakage in year 3 (2 years remaining):
- Monoline fair IRD: Your rate 4.54% minus current comparable 4.34% = 0.20% × $350,000 × 2 years = $1,400
- Bank posted-rate IRD: Your rate 4.84% vs posted rate for 2-year term of 3.44% = 1.40% × $350,000 × 2 years = $9,800
Same borrower, same scenario — the bank penalty is 7× higher.
Portability
Portability lets you transfer your existing mortgage to a new property if you move. This avoids the breakage penalty entirely.
| Lender | Portability | Conditions |
|---|---|---|
| First National | Yes | Must close new purchase within 90 days of selling |
| MCAP | Yes | 90-day window |
| RMG | Yes | 90-day window |
| TD | Yes | 90-day window, blend-and-extend available |
| RBC | Yes | 90-day window |
| BMO | Yes | 90-day window |
Most lenders offer portability. The differences are in how they handle it when your new mortgage is larger (blend-and-extend policies) and how rigid the timeline requirements are.
How to get the lowest 5-year fixed rate
Step 1: Use a mortgage broker
A mortgage broker submits your application to multiple lenders simultaneously. This alone typically saves 0.10–0.30% compared to walking into a single bank.
Step 2: Get rate-ready before you apply
| Factor | What Lenders Want | How to Prepare |
|---|---|---|
| Credit score | 720+ for best rates (680+ minimum) | Pay on time, keep utilization below 30%, do not apply for new credit |
| Debt ratios | GDS below 35%, TDS below 42% | Pay down debt, especially high-interest revolving |
| Employment stability | 2+ years same employer or in same field | Have employer letter ready |
| Down payment source | 90 days seasoned in your account | Move your down payment to your account 3+ months before applying |
Step 3: Compare total cost, not just rate
When your broker presents options, ask for the total cost comparison including:
- Interest rate and monthly payment
- Prepayment privileges (lump sum and payment increase percentages)
- Penalty calculation method (3-month interest vs IRD, and which IRD formula)
- Portability terms
- Any restrictions (bona fide sale clause, reinvestment requirements)
Step 4: Lock your rate
Once approved, your lender holds your rate for 120 days. If rates drop before closing, you get the lower rate. If rates rise, you keep the locked rate. This rate hold is free and automatic.
Fixed rate vs variable: quick comparison
| Feature | 5-Year Fixed | 5-Year Variable |
|---|---|---|
| Payment certainty | Fully predictable for 5 years | Changes with each Bank of Canada rate decision |
| Historical performance | Higher total interest paid about 80% of the time | Lower total interest cost historically |
| Current spread | ~4.54–5.00% | Prime minus 0.50–1.00% (~3.45–3.95%, at 4.45% prime) |
| Penalty if broken early | IRD (can be expensive at banks) | 3-month interest only (always cheap) |
| Best when | Rates are low and expected to rise, or you need certainty | Rates are high and expected to fall |
For a detailed variable rate comparison, see Best Variable Rate Mortgages in Canada.