4-Year Fixed Mortgage Rates

The majority of Canadians save at least 20% down when they buy their home. However, did you know that a 20% downpayment usually leads to the highest mortgage rate?

Insured mortgages with a downpayment of less than 20% usually have the lowest mortgage rates. These mortgages, also called high-ratio mortgages, are usually insured by the CMHC or a private mortgage insurer. Lenders are protected by the insurance and due to the lower risk are willing to offer lower rates. However, you will have to pay CMHC insurance premiums, which can cost more than your potential interest savings.

Mortgages with a downpayment of more than 35% also tend to have lower mortgage rates compared to a 20% downpayment. The larger downpayment gives a bigger loss buffer for the lender which lets them offer a lower mortgage rate.

In Canada, out of the $1.1 trillion CAD in outstanding residential mortgages in May 2020, the 5-year fixed rate mortgage takes the crown with over $570 billion, or almost 50%, of all mortgages in Canada. There are more 5-year fixed rate mortgages than all variable rate mortgages combined. The 5-year fixed rate mortgage is so popular that the CMHC uses the Bank of Canada's 5-Year Benchmark Posted Rate for its mortgage stress test.

Comparison of Fixed-Rate Mortgages in Canada