Ontario Mortgage Rates

As of May 19, 2024 at 3:59 PM ET
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Lowest Mortgage Rates in Ontario
As of May 19, 2024
Term
Current Mortgage Rates in Ontario
As of May 19, 2024 at 3:59 PM ET
Mortgage Term
Mortgage Type
Mortgage
Amount
Home Price
Amortization
Years
Occupancy
Mortgage Term
Mortgage Type
Lenders

Insured Rates

What are the average mortgage rates in Ontario?

Based on a basket of 13 lenders in Canada, as of May 19, 2024:

    The basket of 13 lenders includes: CIBC logoCIBC, BMO logoBMO, TD logoTD, Scotiabank logoScotiabank, RBC logoRBC, National Bank logoNational Bank, Desjardins logoDesjardins, nesto logonesto, Tangerine logoTangerine, First National logoFirst National, Alterna Savings logoAlterna Savings, First Ontario logoFirst Ontario, Meridian logoMeridian

    *Prior to March 2024, HSBC Canada was included in the basket

    What are the best mortgage rates in Ontario?

    As of May 19, 2024,

    • The best 1-year fixed insured mortgage rate is 6.39%, which is offered by Butler Mortgage logo Butler Mortgage
    • The best 2-year fixed insured mortgage rate is 5.44%, which is offered by 6ix Mortgage Group logo 6ix Mortgage Group
    • The best 3-year fixed insured mortgage rate is 4.74%, which is offered by Butler Mortgage logo Butler Mortgage
    • The best 4-year fixed insured mortgage rate is 4.89%, which is offered by Butler Mortgage logo Butler Mortgage
    • The best 5-year fixed insured mortgage rate is 4.59%, which is offered by Butler Mortgage logo Butler Mortgage
    • The best 10-year fixed insured mortgage rate is 5.84%, which is offered by nesto logo nesto
    • The best 5-year variable insured mortgage rate is 5.90%, which is offered by nesto logo nesto

    Ontario Housing Market at a Glance

    Ontario Housing Market Overview
    Monthly DataAvg. Home PriceMonthly ChangeYearly Change
    OntarioMarch 2024---
    GTAApril 2024---
    TorontoApril 2024---
    OttawaApril 2024---
    MississaugaApril 2024---
    BramptonApril 2024---
    LondonApril 2024---

    Home to 39% of Canada’s population, it is no wonder that Ontario accounts for close to 41% of all new housing starts and construction in Canada. With the Government of Ontario projecting Ontario’s population to increase from 15 million in 2022 to over 20.4 million by 2046, and with net migration accounting for 86% of the population growth during this period, Canada’s most populous province will continue to lead the country in real estate activity.

    While the Toronto housing market will naturally be top-of-mind when thinking about places to buy a home, increasing numbers of homebuyers are looking outside of the big cities. According to Statistics Canada, close to 100,000 people left Toronto in 2022, with 78% of them leaving for other parts of Ontario. A Fall 2020 survey by RE/MAX also found that 32% of Canadians no longer want to live in large urban centres, and that 48% want to live closer to green spaces. This suggests activity in suburban areas will remain strong into the future. Even so, Toronto saw 216,600 new immigrants in 2022.

    The average price of a house in Ontario fell NaN% from the year before to $ in March 2024, according to the Canadian Real Estate Association. In Toronto, the average sold price of a house was $ in April 2024.

    Best 5-Year Fixed Mortgage Rates in Canada CanadaLeaf
    Mortgage Term:
    Fixed
    Variable

    Mortgage Lenders in Ontario

    With such a bustling real estate market comes a multitude of mortgage lenders for homebuyers to choose from. Naturally, Canada’s Big 6 Banks (RBC, TD, Scotiabank, CIBC, BMO, and National Bank) operate in Ontario and are also the largest lenders in the province. The Big Six held 72.99% of all mortgages in 2023, as reported by the federal government’s Canada Mortgage and Housing Corporation (CMHC), with credit unions making up 12.85% and other banks making up 5.82%.

    However, other players are quickly eating up market share, with mortgage investment entities, such as private lenders in Ontario and B-lenders, growing to 10.47% of all new mortgages in 2023. Ontario credit unions also saw growth, rising to 19.05% of all new mortgages. Only 51.47% of all new mortgages in 2023 were by one of the Big 6 Banks. While that’s still a sizable amount, it’s a marked difference compared to previous years.

    For more expensive housing markets where it’s harder to afford a home, such as in the GTA, alternative and private lenders play a greater role. With the Greater Toronto Area projected to grow by 41.3% to 10 million by 2046, and with the GTA estimated to account for 49.1% of Ontario's population, alternative and private lenders will become more commonplace.

    There are also smaller mortgage lenders that specialize in certain customer groups. Wealth One Bank of Canada is a federally regulated bank that focuses on self-employed borrowers, newcomers, and those with foreign income sources.

    Home Bank is also a federally regulated bank, with its parent company, Home Trust Company, positioned as an alternative mortgage lender for those with bad credit or self-employment income.

    Mortgage Lenders with Branches in Ontario

    LenderNumber of Branches in OntarioValue of Canadian Residential Mortgages2 (End of 2022)Value of Canadian Residential Mortgages2 (End of 2020)
    TD561$246.2 Billion$202.9 Billion
    RBC508$418.8 Billion$342.6 Billion
    CIBC484$233.6 Billion$216 Billion
    BMO382$148.8 Billion$127 Billion
    Scotiabank437$333.7 Billion$245 Billion
    Meridian Credit Union89$12.24 Billion$11 Billion
    National Bank97$80.1 Billion$65 Billion
    HSBC102$33.3 Billion$28 Billion
    Desjardins Ontario Credit Union48$7.11 Billion$5.51 Billion
    Alterna Savings46$6.44 Billion$2.03 Billion
    FirstOntario Credit Union29$4.14 Billion$3.35 Billion
    Kawartha Credit Union22$1.45 Billion$1.27 Billion
    DUCA Credit Union17$4.86 Billion$3.10 Billion
    ICICI Bank5--
    Laurentian Bank3 by appointment only$16.16 Billion$15.98 Billion
    TangerineTemporarily closed--
    Canadian Western Bank1$7.30 Billion$6.07 Billion
    First NationalBrokers across Ontario$131 Billion$83.6 Billion
    CMLSBrokers across Ontario--
    MCAPBrokers across Ontario--
    Investors GroupAdvisors across Ontario--
    Branch data as of June 2023

    Digital Mortgage Lenders in Ontario

    LenderValue of Canadian Residential Mortgages2(End of 2022) Value of Canadian Residential Mortgages2 (End of 2020)
    Equitable Bank$30.2 Billion$17.13 Billion
    motusbank$181.87 Million-
    Simplii Financial--
    Manulife Bank$21.6 Billion$20.4 BIllion

    Market Share by Mortgage Value in Ontario

    OntarioTorontoNon-Big 8 Markets
    Big Five Banks72.6%74.0%71.3%
    Credit Union6.1%2.9%8.6%
    Private Lenders6.7%8.9%6.1%
    2From lender’s annual reports
    Source: Teranet Market Insights Report - March 2019

    Looking specifically at Toronto, the numbers dramatically change. The Big Five Banks hold 74% of all mortgages in Toronto, with other banks, such as HSBC, at 8.7%, credit unions at 2.9%, and Ontario private mortgage lenders at 8.9%. What stands out is the much lower market share that credit unions have, which is half of their province-wide share.

    The opposite is true when we look at Ontario’s smaller real estate markets. Outside of Ontario’s Big Eight Real Estate Markets (Toronto, Ottawa, Mississauga, Brampton, Oakville, Hamilton, Vaughan, and Markham), the Big Five Banks have 71.3% market share, while credit unions have 8.6%, and private lenders at 6.1%. Credit unions are more popular in smaller Ontario markets than they are in Toronto, while private lenders have a slightly lower share.

    Private lenders are also more popular in Toronto compared to Ontario as a whole. This may be due to higher house prices in Toronto. The average Canadian mortgage held at a private mortgage lender in 2019 was $254,986, while the average mortgage held at a bank is $220,650. People turned down for a mortgage by a bank may be turning towards private lenders as an alternative.

    Increasing home prices may also attract the attention of private lenders as homeowners’ equity rises with prices. Those seeking to unlock their home’s equity can find the numerous numbers of private lenders to be enticing, however they can come with much higher mortgage rates along with additional fees, and negative changes in housing prices can leave you underwater.

    With the Greater Toronto Area projected to grow by 36.7% to 9.5 million by 2046, and with the GTA estimated to account for 49.8% of Ontario's population, alternative and private lenders will play an increasingly larger role in the GTA.

    Demographics also play a large role in what kind of mortgage lender a homebuyer will choose to work with. 21.3% of Generation Z in Ontario (those under 24 years old) have their mortgage through a private mortgage lender, compared to only 5.7% of Millenials.

    Mortgage Lenders by Demographic in Ontario - 2018

    Big Five BanksCredit UnionsOther BanksPrivate LendersTrust Company
    Gen Z (Under 24)55.9%2.2%16.7%21.3%3.9%
    Millennial (25-39)69.4%3.5%8.3%5.7%13.1%
    Gen X (40-54)71.2%3.2%8.8%5.6%11.1%
    Baby Boomers (55-73)73.9%3.7%8.0%6.1%8.3%
    Above 74 years old75.7%4.6%7.3%6.4%6.2%
    Source: Teranet Market Insights Report - March 2019
    The Big Five Banks are RBC, TD, Scotiabank, CIBC, and BMO.

    Five-year fixed mortgages are popular in Ontario because it offers the perfect balance between predictability and stability in mortgage payments, while not being excessively long. With a five-year fixed mortgage rate, you will be locking your mortgage interest rate and mortgage payments for five years. During this time, your payments and interest rate won't change.

    How are 5-year fixed mortgage rates set in Ontario? They follow the 5-Year Government of Canada bond yield, with 5-year fixed mortgage rates generally priced at a spread above the government bond yield. This spread can narrow or widen due to various factors.

    Two-year and three-year mortgages are also common, especially after mortgage rates increased dramatically in 2022. One reason for borrowers to choose a short mortgage term is if they think that rates may decrease in the future.

    However, for many homeowners, the mortgage renewal process can be a hassle. From comparing rates, setting up appointments, gathering documents, and signing papers, the process can take up time, especially if your mortgage term is only one or two years. Having to renew your mortgage every two years can feel like a burden to some borrowers.

    Not having to worry about mortgage rates and renewing for five years gives many homeowners peace of mind, and they’re willing to pay for this through a slight premium on their mortgage rate. While 2-year and 3-year mortgage terms might have a lower mortgage rate, the small premium for a 5-year mortgage term allows more time for homeowners to not have to worry about their mortgage.

    If you’ve got a particularly good deal and are happy with your current mortgage rate, you might decide to lock-in your rate for a longer term. Locking in a rate for 5 years lets you avoid any short-term fluctuations in market interest rates. A 2-year term won’t give you much time to enjoy your interest savings, and it’s possible that interest rates may increase during these two years, meaning that you’ll need to renew again at a higher rate.

    Best 5-Year Fixed Mortgage Rates in Ontario
    Mortgage Term:
    Fixed
    Variable

    Mortgage Brokers in Ontario

    There were over 2,699 licensed mortgage brokers and 13,260 licensed mortgage agents in Ontario in 2022 by the Financial Services Regulatory Authority of Ontario (FSRA).. That’s significantly higher than the 1,600 brokers and 12,000 mortgage agents seen in 2018.

    The large number of mortgage brokers in Ontario opens up plenty of options for you, making it easier to get the best mortgage rate in Ontario. 61% of first-time homebuyers consulted with a mortgage broker, while 39% obtained a mortgage through their mortgage broker. Mortgage brokers can not only make the mortgage process easier, they may also be able to access lower mortgage rates through their network of lenders and through negotiating on your behalf.

    Dominion Lending Centres is Ontario’s largest mortgage brokerage and is also among Canada’s largest mortgage brokerages. It’s also Canada’s only publicly traded mortgage brokerage, trading on the TSX Venture Exchange under the ticker “DLCG”. Dominion Lending Centres has 530 franchises, 7,800 mortgage agents, and funded over $70 billion in mortgages across Canada in 2022. Dominion Lending Centres two main broker subsidiaries are:

    • Mortgage Architects
    • The Mortgage Centre

    M3 Financial Group claims to be the largest non-bank mortgage originator in the country, funding $64 billion in mortgages in 2022. M3 works with 133 mortgage lenders, helping borrowers get the best possible mortgage rate. M3 Group has over 8,300 brokers across Canada and includes well-known names such as:

    • Verico
    • Invis
    • Mortgage Intelligence
    • Mortgage Alliance
    • Multi-Prêts Mortgages

    Some other major mortgage brokerages in Ontario are:

    • Butler Mortgage
    • Centum Financial Group
    • CanWise Financial
    • intelliMortgage
    • Northwood Mortgage

    Ontario Mortgage Lender Regulations

    Chartered banks, including banks in Ontario, are federally regulated. Federal regulators include the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OSFI). Banks that are members of the Canadian Deposit Insurance Corporation (CDIC) will also need to follow CDIC’s by-laws.

    In Ontario, credit unions and mortgage brokerages are regulated by the Financial Services Commission of Ontario (FSCO), now known as the Financial Services Regulatory Authority (FSRA).

    Private mortgage lenders do not need to be licensed in Ontario if they source through a licensed mortgage broker, however private lenders dealing directly with the public will need to be licensed.

    Ontario credit unions are also regulated by the Financial Services Regulatory Authority (FSRA). Provincial credit unions that are members of the Deposit Insurance Corporation of Ontario (DICO) will also need to follow DICO’s by-laws.

    RegulatorsLaws and Regulations
    BanksFinancial Consumer Agency of Canada (FCAC)
    Office of the Superintendent of Financial Institutions (OSFI)
    Canada Deposit Insurance Corporation (CDIC)
    The Bank Act
    102 Regulations, including:
    Cost of Borrowing (Banks) Regulations (SOR/2001-101)
    Mortgage Insurance Business Regulations (SOR/2010-68)
    Credit UnionsFinancial Services Regulatory Authority (FSRA)
    Deposit Insurance Corporation of Ontario (DICO)
    Credit Unions and Caisses Populaires Act, 1994
    Ontario Regulation 237/09
    Ontario Regulation 238/09 (Cost of Borrowing and Disclosure to Borrowers)
    Mortgage BrokersFinancial Services Regulatory Authority (FSRA)Mortgages Act, 1990
    Mortgage Brokerages, Lenders and Administrators Act, 2006
    13 Regulations, including:
    Ontario Regulation 191/08 (Cost of Borrowing and Disclosure to Borrowers)
    Ontario Regulation 409/07 (Mortgage Brokers and Agents: Licensing)

    It’s important to check to see if your mortgage broker or agent is licensed. You can check to see if they are licensed by searching for your broker or agent on FSRA’s website.

    Ontario Mortgage Broker Regulations

    Ontario’s Mortgage Brokerages, Lenders and Administrators Act outlines responsibilities that mortgage lenders have. For example, a mortgage broker has a duty to verify a borrower's identity, to verify that a borrower has the legal authority to obtain a mortgage for a property, and to ensure the accuracy of a borrower's mortgage application.

    A mortgage broker must ensure that the mortgage will be suitable for the borrower, including disclosing any risks that the mortgage might have. For mortgages of $400,000 or less, a mortgage broker cannot require a borrower to make a deposit. Brokers need to keep mortgage agreements and other related documents for at least six years after the term of a mortgage ends.

    For reverse mortgages, borrowers need to provide a written statement from a lawyer that shows that the borrower has received independent legal advice.

    Lenders will need to disclose required information to the borrower at least two business days before a mortgage agreement is signed. This disclosure includes the cost of borrowing, which needs to include things such as the mortgage principal, total amount of payments, APR, an amortization schedule, and any brokerage fees.

    This disclosure is also required to be given to borrowers at least 21 days before renewal. The cost of borrowing of the mortgage when renewed, including the mortgage rate, cannot be higher than the cost of borrowing shown in the disclosure statement.

    For mortgages with a term length longer than 5 years, no prepayment penalties can be charged other than three months of interest once 5 years has passed.

    Ontario Mortgage Default

    In 2020, Ontario’s mortgage arrears rate was 0.12%. In 2023, 0.07% of mortgages in Ontario were delinquent for at least 90 days. This is lower than Canada’s national average of 0.15%.

    If a mortgage has been delinquent for more than three months in Ontario, the borrower has defaulted and the lender will have a power of sale. Ontario’s Mortgages Act regulates powers of sale in Ontario. A power of sale allows the mortgage lender to sell the property to recover their loss. Before the property can be sold, the lender will need to provide written notice to the borrowers at least 45 days before the sale. This notice can be provided as soon as 15 days after default. Written notice by registered mail is required for deceased borrowers.

    Lenders can sell the home without providing notice to the borrower if the lender requests for a power of sale without notice from a judge of the Ontario Superior Court of Justice.

    Mortgage Business in Ontario

    Dominion Lending Centres alone funded $70 billion worth of Canadian mortgages in 2022. Ontario's mortgage industry is a multi-billion dollar one, and while less than 30% of Canadians have a mortgage, 60% of homeowners do have a mortgage. FSCO estimates that Ontario mortgage loans reached $1.4 trillion in 2015, with billions more in mortgages being borrowed every year. In 2020, RBC lent out an additional $19 billion in mortgages to Ontarians, while HSBC lent out $1.27 billion.

    The high level of household debt means that mortgage payments make up a large amount of Ontarians budgets. In Toronto, the average monthly scheduled mortgage payment was $2,176 in 2023, significantly higher than the $1,866 average monthly mortgage payment in 2021.

    In lower cost areas of the province, such as Windsor, the average monthly mortgage payment was $1,255, still up from the $1,082 average monthly payment seen in 2021. While Windsor mortgage rates can be different from Toronto mortgage rates, this difference in mortgage payment amounts is mostly due to significantly higher home prices, and higher mortgage balances, in the GTA.

    Best 5-Year Fixed Mortgage Rates in Ontario
    Mortgage Term:
    Fixed
    Variable

    Ontario Average Monthly Mortgage Payment by City

    CityAverage Monthly Mortgage Payment (2023)Average Monthly Mortgage Payment (2021)
    Toronto$2,176$1,866
    Oshawa$1,889$1,574
    Hamilton$1,809$1,528
    Guelph$1,724$1,485
    Barrie$1,752$1,472
    Kitchener - Cambridge - Waterloo$1,710$1,438
    Ottawa-Gatineau$1,474$1,303
    Brantford$1,517$1,291
    Kingston$1,434$1,272
    Peterborough$1,460$1,267
    London$1,452$1,217
    St. Catharines - Niagara$1,402$1,204
    Greater Sudbury$1,282$1,143
    Thunder Bay$1,187$1,098
    Windsor$1,255$1,082
    Canada$1,561$1,358
    Source: CMHC
    Best 5-Year Fixed Mortgage Rates in Ontario
    Mortgage Term:
    Fixed
    Variable

    Why are refinance mortgage rates higher than new purchase mortgage rates in Ontario?

    If you've been comparing mortgage rates online, you might be wondering why mortgage rates for refinancing are higher than initial purchase mortgage rates for when you're buying a home, or even when you’re transferring your mortgage and switching to a new lender. A quick look at the list of Ontario mortgage rates above separate rates into three categories: new mortgages, switch/transfer, and refinancing.

    There are a few reasons for this difference between refinance and new purchase rates. The first is added risk with some mortgage refinances. With a cash-out refinance, you’re increasing your mortgage so that you can borrow more money to use for things like debt consolidation or home renovations. As you’re increasing your mortgage balance, you’re increasing your level of debt. A higher loan-to-value (LTV) ratio makes your mortgage more risky, which can explain the higher mortgage rate for refinancing. Your mortgage payments will also be larger, which can make it more difficult for some borrowers to afford.

    What if you’re not looking to borrow more money, and you’re just looking to lock-in a lower mortgage rate? If so, you’re actually reducing the risk of your mortgage, as a lower mortgage rate can allow for smaller mortgage payments. You’ve also shown a history of regular mortgage payments, which makes you more reliable compared to a borrower looking to purchase a new home with no mortgage payment history with the lender. Are refinance rates still higher?

    The answer is that it depends on the lender. Mortgage lenders concentrate their efforts on certain areas. For example, some B-lenders might focus only on originating new mortgages which they can then bundle and pool into mortgage-backed securities (MBS), which they then sell off to investors. As their business is in originations, lenders that focus on mortgage originations might want to have competitive new purchase mortgage rates, while their refinance mortgage rates are less of a priority.

    The opposite can also be true, where some lenders want to direct their attention on refinancing rather than new purchases. Other lenders might have their refinance rates being the same as their new purchase rates.

    One might even speculate that some lenders purposely have higher refinancing rates to discourage borrowers from refinancing at a lower rate, or to make up and partially offset losses from lower mortgage interest payments should a borrower refinance.

    How Much Mortgage You Need to Buy a Home in Ontario

    In Ontario, the average home sold price was $ in March 2024. If you're looking to buy a house in Ontario with a home purchase price of $, then your minimum down payment would need to be 20.00%. This is because the minimum down payment is 5% for the amount under $500,000, and 10% for the remainder up to $999,999. In this case, your down payment would need to be at least $NaN.

    Along with a $NaN CMHC insurance premium for making a down payment less than 20%, your required mortgage amount for an average Ontario home would be $NaN. To put this into perspective, you would need to have a household income of at least $NaN with no other monthly expenses in order to afford a mortgage for the average home price in Ontario.

    If you make a down payment of 20% to avoid the cost of the CMHC insurance premium, your down payment would need to be at least $NaN. Your mortgage amount would then be $NaN.

    Looking at CMHC data on the average value of a new mortgage in 2023, the average new mortgage in Ontario was $406,421 in 2023. In comparison, the average new mortgage in Toronto was $482,933. Other areas of the province can be significantly lower. For example, the average new mortgage amount in Sudbury was $242,165

    Ontario Average New Mortgage Amount by City

    CityAverage New Mortgage Amount (2023)Average New Mortgage Amount (2021)
    Toronto$482,933$499,640
    Oshawa$410,240$404,377
    Hamilton$387,015$393,909
    Guelph$359,329$373,516
    Kitchener - Cambridge - Waterloo$368,522$368,730
    Barrie$375,727$362,401
    Brantford$324,333$319,841
    London$321,860$307,565
    St. Catharines - Niagara$307,706$305,595
    Peterborough$328,641$301,515
    Ottawa-Gatineau$292,818$295,399
    Kingston$299,666$283,771
    Windsor$275,451$254,769
    Greater Sudbury$242,165$223,079
    Thunder Bay$231,028$209,599
    Ontario$406,421$403,720
    Source: CMHC

    Why is the required mortgage amount so much higher than the average new mortgage in Ontario?

    You might be wondering why the average home price in Ontario is $ while the average new mortgage amount in the province was only $406,421. That’s because most mortgage borrowers in Ontario make a down payment that is larger than 20% for a new mortgage. In this case, these numbers suggest that the average down payment would be NaN%.

    Looking at the 2022 annual reports of major banks gives us a better clue of average down payments in Ontario. For HSBC, 84% of HSBC's Ontario mortgages were uninsured, which means a down payment of at least 20% is required. Out of these uninsured mortgages, the average loan-to-value (LTV) was 59.7% for new mortgage originations in Ontario. That would be the same as a 40.3% average down payment.

    Other banks have similar numbers. RBC's average LTV for Ontario mortgages in 2022 was 70%, CIBC was 65%, and Scotiabank was 62.9%. This shows that most borrowers make a down payment that is more than the minimum down payment, and that most mortgages would be uninsured rather than insured. This reduces the average new mortgage amount to be lower than what is required.

    Ontario Average Mortgage LTV at Origination in 2022

    BankLTVEquivalent Down Payment
    CIBC65%35%
    HSBC59.7%40.3%
    Scotiabank62.9%37.1%
    RBC70%30%

    How Much Mortgage You Need to Buy a Home in Toronto

    Toronto’s housing market is expensive, which means that your average Toronto mortgage will be larger than those seen in the rest of the province.

    Looking at Toronto housing market data, the average sold price in April 2024 was $. Since the purchase price is over $1 million, you will need to make a down payment that is at least 20%, or $NaN. This would make a required mortgage of $NaN.

    The table below shows the minimum required down payment and mortgage amount for the average detached home, semi-detached home, townhouse, and condo apartment in Toronto for April 2024. For homes below $1 million, the required down payment is less than 20%.

    Toronto Average Required Mortgage and Down Payments

    Property TypeAverage Sold PriceMinimum Down PaymentMortgage Amount
    Detached$$NaN$NaN
    Semi-Detached$$NaN$NaN
    Townhouse$$NaN$NaN
    Condo Apartment$$NaN$NaN
    All Properties$ $NaN $NaN
    Using average sold prices as of April 2024

    Why Comparing Ontario Mortgage Rates Matter

    Comparing mortgage rates in Ontario is especially important due to Ontario mortgages being generally large. A small difference in Ontario mortgage rates can result in you paying thousands of dollars more on your mortgage.

    For example, let’s look at the impact of a mortgage rate that is 20 basis points (0.2%) more than a mortgage rate offered by another Ontario mortgage lender on a mortgage of $800,000.

    With a fixed mortgage rate of 4% for five years, the total interest paid over the five years would be $148,921 while your monthly mortgage payment would be $4,208. At an Ontario mortgage rate of 5%, your total interest cost over the 5-year term would be $187,230, while your monthly mortgage payment increases to $4,653.

    This shows that the difference between a 4% mortgage rate and a 5% mortgage rate can mean paying an additional $38,309 in interest over five years. It pays off to get the lowest mortgage rate!

    Mortgage Programs for Ontario Newcomers

    Newcomers to Ontario, including new immigrants, might find it difficult to get a mortgage in Ontario. The largest barrier for newcomers would be their lack of Canadian credit history. That’s why many major banks and lenders offer mortgage programs for Ontario newcomers.

    To qualify for mortgage options for newcomers, you will either need to be a permanent resident or have a temporary resident status. If you have permanent residence (PR) status, you will usually only be eligible for newcomers mortgage programs if you have been in Canada for less than five years. If you're a non-permanent resident looking to get a non-resident mortgage, then you must have a work permit.

    Banks that offer mortgage programs for newcomers to Ontario include RBC, Scotiabank, TD, and CIBC.

    Many other Ontario mortgage lenders offer special mortgage programs for newcomers. For example, Alterna Savings gives a 0.10% discount off their posted mortgage rate for newcomers getting a mortgage that is larger than $150,000, and a 0.05% discount for mortgages smaller than $150,000. An Ontario mortgage broker can also help newcomers with getting a mortgage.

    CMHC Newcomers

    Ontario mortgage lenders will require you to get mortgage default insurance if you make a down payment that is less than 20%. For some lenders, you might still need insurance even if you make a down payment that is as large as 35%.

    CMHC provides mortgage default insurance through their CMHC Newcomers insurance, which has the same CMHC premiums as their regular mortgage insurance. To qualify for the CMHC Newcomers program, permanent residents will need to have a minimum credit score of 600, or be able to provide alternative sources of credit if they don't have a Canadian credit history, such as rent payments. If you don't have a history of regular rent payments, then you will need to provide proof of regular payments of three other obligations. Alternative obligations will need to be regularly scheduled for the previous 12 months, such as utilities, cable, insurance premiums, or savings.

    For non-permanent residents from the United States, the CMHC will use an international credit report to obtain their U.S. credit history. For non-permanent residents for other countries and if an international credit report is not sufficient, the mortgage lender may ask the borrower for a letter of reference from a financial institution.

    Non-permanent residents must make a minimum down payment of at least 10% for CMHC-insured mortgages, and they can only purchase 1-unit owner-occupied properties. Permanent residents can purchase properties with up to 4-units, such as rental properties, including non-owner occupied properties.

    Best 5-Year Fixed Mortgage Rates in Ontario
    Mortgage Term:
    Fixed
    Variable

    Who Gets the Lowest Mortgage Rates in Ontario?

    Getting the lowest mortgage rate in Ontario doesn't mean that you need to be a perfect borrower, but you may still need to meet a few general requirements. High-ratio mortgages with mortgage default insurance will generally have Ontario’s best mortgage rates. To qualify for mortgage insurance, such as CMHC insurance, you’ll need to meet some of CMHC’s eligibility requirements. The CMHC changed their mortgage rules in July 2021.

    To qualify for a CMHC-insured mortgage, you will need to have a minimum credit score of 600. You'll also need to have debt service ratios of 39% or less for Gross Debt Service (GDS) and 44% or less for Total Debt Service (TDS). The home purchase price must be less than $1 million, and your mortgage amortization can’t be more than 25 years.

    Meeting these requirements makes you eligible for insured mortgages, which have better rates than uninsured mortgages. However, although insured mortgages have the lowest mortgage rates in Ontario, you’ll need to pay for mortgage insurance premiums.

    Having a higher income gives you access to lower rates and can make you eligible for a larger mortgage amount. Having a low income, bad credit score, and a high LTV will generally cause you to have higher mortgage rates.

    If you make a down payment that is larger than 20% but you still meet CMHC’s mortgage rules, you have an insurable mortgage that can still qualify for low mortgage rates. For more information on the differences, visit our insurable vs uninsurable mortgages page.

    Most mortgages in Ontario are uninsured. 83% of RBC mortgages in Ontario are uninsured, with 17% being insured. 85% of CIBC’s Ontario mortgages are also uninsured. For CIBC's uninsured mortgages, the average LTV on their outstanding mortgages was 65%. 84% of HSBC’s Ontario mortgages are uninsured, while TD is at 82%.

    Insured vs Uninsured Ontario Mortgages

    Lender% of Mortgages Uninsured% of Mortgages Insured
    RBC83%17%
    TD82%18%
    CIBC85%15%
    HSBC84%16%
    Data as of June 2023

    Ontario-Only Mortgage Lenders

    Some mortgage lenders are only available in Ontario. This is most commonly the case for credit unions, who are provincially regulated. There are over 70 credit unions that only operate within Ontario. This includes FirstOntario Credit Union, Alterna Savings, Community Trust, DUCA, Kawartha Credit Union, and Meridian, which are credit unions that only operate and originate mortgages within Ontario. Alterna Bank, a subsidiary of Alterna Savings, offers mortgages to all provinces, excluding Quebec.

    FirstOntario

    Founded over 80 years ago, FirstOntario Credit Union has grown to become the sixth largest credit union in Ontario. You will need to be a member of FirstOntario Credit Union in order to be eligible for a mortgage with them. FirstOntario only offers mortgages for properties within Ontario. FirstOntario membership shares cost $5 each. Members 21 years of age or over must have at least five membership shares, with their total shares increasing to at least 30 shares over 25 years. This means that if you were to have a mortgage with FirstOntario for 25 years, you would need to have purchased at least $150 in membership shares.

    FirstOntario is a member of the Credit Union Central of Ontario, which allows FirstOntario to offer CMHC-insured high ratio mortgages alongside traditional mortgages. High-ratio FirstOntario mortgage rates can be lower compared to mortgages without CMHC insurance. In addition to CMHC-insured mortgages, FirstOntario’s high ratio mortgages can also be insured by Sagen (Genworth) or Canada Guaranty.

    FirstOntario is an active part of the local community, especially in their main servicing regions of Hamilton, Halton, Niagara, and Southwest Ontario. FirstOntario is committed to local football and hockey teams (Hamilton Tiger-Cats and Hamilton Bulldogs), and invests back into the community through the FirstOntario Centre, FirstOntario Concert Hall, FirstOntario Performing Arts Centre St. Catharines, and the FirstOntario Arts Centre Milton.

    FirstOntario Credit Union members received $623,000 in dividends in 2020. With 1.8 million membership shares, each share would have received a $0.34 dividend. This is equivalent to at least $1.70 per member in 2020.

    Kawartha Credit Union

    Kawartha Credit Union has 22 branches across the Kawartha Lakes region of Ontario. Founded 60 years ago, Kawartha Credit Union now has over 70,000 members with a local presence in Cornwall, Huntsville, Kingston, Parry Sound, Trenton, Cobourg, Bracebridge, Peterborough, and more. Kawartha membership shares are $5 each. You'll need to purchase at least 5 membership shares in order to be eligible for Kawartha's products and services. Kawartha Credit Union only offers mortgages for properties within Ontario.

    Kawartha Credit Union is a member of Credit Union Central of Ontario, which means that Kawartha can offer high-ratio mortgages with CMHC, Genworth, or Canada Guaranty mortgage insurance.

    In addition to member shares, you'll receive Affinity Shares, which is based on the total balance of your loan and deposits. An annual cash dividend is paid to Affinity Shares members. In 2019, the dividend was $0.47 for every $1,000 balance.

    For example, if you have a $500,000 mortgage with Kawartha Credit Union, you would have received $235 in cash in 2019. Combined, Kawartha handed out over $1.1 million in profits through their Affinity Shares dividends in 2019. This extra bonus can help indirectly reduce your Kawartha Credit Union mortgage rate.

    Kawartha Credit Union has given away over $2 million to local community programs, including donations to food banks, local hospitals, shelters, and universities and colleges.

    Meridian Credit Union

    Meridian Credit Union is the largest credit union in Ontario and the second largest in Ontario. 370,000 members trust Meridian with over $23 billion in assets spread out over 92 branches throughout Ontario. Meridian Credit Union mortgages are only available for residents of Ontario. Meridian's savings and chequing accounts are open to anyone in Canada. Meridian offers high-ratio mortgages with CMHC insurance.

    Meridian offers Rate Scoops, which are alerts sent a few days before any Meridian mortgage rate changes.

    To become a member, you'll need to purchase a Meridian membership share. Membership shares are $1 each. Meridian members can hold up to 1,000 membership shares (for a total of $1,000) per member. You can also choose to invest in Meridian's Class A Shares, which provide a minimum dividend of 4% per year. Class A shares cost $1 each, and you can buy as little as you’d like.

    How to Get a Mortgage for Rental Property in Ontario

    Many major banks and lenders offer rental property and investment property mortgages if you're looking to purchase an investment property, such as for generating rental income. The down payment required for a rental property will depend on whether or not you will also be living in the property.

    For a duplex, which is a home with two units, the minimum down payment is 5% for the first $500,000 and 10% on the remainder if one of the units is owner-occupied. For triplex or quadplex multi-family homes that are owner-occupied, the minimum down payment is 10%. If the property will not be occupied by the owner, then the minimum down payment is 20%.

    When applying for a mortgage, your lender may consider rental income when calculating your debt service ratios. Some lenders might only consider 50% of your rental income when adding it to your household income. You may be required to provide form T776 Statement of Real Estate Rentals, provide current lease agreements, or your opinion of current market rent.

    If you're looking to purchase a rental property that has more than four units, then you will need to get a commercial mortgage. Applications for commercial mortgages can be more difficult, and commercial mortgage rates can be higher than rates for residential properties with four units or less.

    When Should I Refinance My Mortgage in Ontario?

    Refinancing your mortgage makes sense if:

    • Current Ontario mortgage rates have fallen enough that the difference in interest savings can outweigh the cost of refinancing
    • You need to borrow money now for other uses.

    Interest Savings

    You might decide to refinance your mortgage if current mortgage rates are significantly lower than your fixed mortgage rate. However, it doesn’t always make sense to refinance if rates aren’t significantly lower, or else the cost of mortgage penalties would eat up your interest savings.

    For example, let's look at a $500,000 mortgage with monthly payments and a 25-year amortization. You signed a 5-year closed mortgage two years ago with a fixed mortgage rate of 3%. There's three years left in your mortgage term, but current 5-year fixed mortgage rates are only 1.99%. Does it make sense to refinance your mortgage?

    If you decide not to refinance, you'll be paying $42,912 interest over the remaining three years at the 3% mortgage rate. If you do refinance, you will pay $28,360 interest over the remaining three years at a 1.99% mortgage rate. However, you will be charged a $9,900 mortgage break penalty. This leaves you at a net savings of $4,652. In this case, refinancing can save you $4,652 over three years.

    If current rates aren't that much lower than your fixed rate, it might not make sense to refinance. If current rates are 2.5%, you will pay $35,697 interest over the remaining three years. After the $9,900 mortgage penalty, you'll be at a $2,685 net loss. The mortgage penalty is greater than your interest savings!

    The remaining term of your mortgage will also affect the payoff of refinancing early. With three years remaining when comparing a 3% mortgage rate and a 2% mortgage rate, you will save $4,652 after penalties for a $500,000 mortgage. If there are four years remaining on your mortgage term, you’ll have more time to enjoy the interest savings, with $5,794 net savings.

    Having one year remaining on your current term will reduce potential refinancing savings to $1,155, while six months remaining will cause a $1,286 net loss.

    If you’re looking to refinance to lower your mortgage interest rate, then your mortgage amount, term remaining, and the difference in rates will affect your potential mortgage interest savings. With Ontario mortgage rates expected to rise over the next few years, you might even want to consider renewing or refinancing your mortgage early. To see your potential interest savings for refinancing your Ontario mortgage, visit our mortgage refinance calculator.

    To Borrow More Money

    You can use a mortgage refinance to borrow money by using your home equity. You can refinance your mortgage up to 80% of your home's value. The difference between your mortgage refinance amount and the current amount of your mortgage will be the additional amount of money that you are borrowing.

    For example, if your home is worth $1 million and you currently have a mortgage of $500,000, you can refinance your mortgage up to $800,000. The difference, $300,000, is the additional amount that you are borrowing.

    With a cash-out refinance, you will receive this amount in cash. You can then use it for large expenses such as home improvements or renovations, for investing, paying off debt, or for large purchases. For smaller purchases, or if you need to access your home equity often, a home equity line of credit (HELOC) might be a better option than a mortgage refinance.

    Why do home buyers put finance conditions in Ontario while they have mortgage pre-approval?

    Ontario’s competitive housing market means that many home buyers in Ontario are making offers to buy houses with no conditions. Unconditional offers, which include no property inspection, financing condition, or condition about the sale of the buyer's home, can be very risky and dangerous, but are becoming more and more commonplace. Even so, having a finance condition can be very important for home buyers when making an offer,

    A financing condition protects you if you're not able to get financing to purchase the home. Many Ontario home buyers still put a financing condition in their offer even if they're pre-approved for a mortgage because pre-approval still doesn't guarantee that you'll get a mortgage. The only guarantee for a mortgage is when you are approved for a mortgage.

    You might be declined for a mortgage even if you have been pre-approved if your financial situation has greatly changed. If you've lost your job or declared bankruptcy in the period between receiving your mortgage pre-approval and when it's time for final mortgage approval, you might not be approved for a mortgage.

    Other reasons might be that you were pre-approved for a set amount, but the actual amount that your mortgage can be is smaller. This can happen if a home appraisal shows that the property has a significantly lower value than expected, or if your current financial situation doesn't warrant as high of a borrowing amount.

    Not having a finance condition can be risky. If you're not approved for a mortgage or you're not approved for the full amount, you'll need to come up with the difference. Backing away from the sale and breaching the contract means that you will lose your deposit and you can even be sued by the seller.

    Mortgage Rights in Ontario

    The Ontario Mortgages Act gives certain rights to mortgage borrowers, also referred to as mortgagors.

    Some mortgage rights include:

    • The borrower has the right to inspect the property title, to receive a copy of the mortgage, and to have possession of the land.
    • If the mortgage is in default, the borrower can pay three months interest on the amount in arrear or inform the lender in writing that they will make a payment
    • The borrower can ask the lender to send a written statement of arrears and expenses if the borrower is in default
    • A mortgage lender cannot disrupt heat, fuel, electricity, food, or water for rental units with the intention of causing the tenant to leave
    This calculator is provided for general information purposes only. WOWA does not guarantee the accuracy of the information shown and is not responsible for any consequence that arise from the use of the calculator and its results. Any financing products shown are subject to terms and conditions and may not be available in certain regions.