Canadian mortgage rates, right now.

How Canadian mortgage rates are actually set

Three different things move Canadian mortgage rates, and most articles confuse them. Worth getting straight before you shop.

Variable rates follow the Bank of Canada

Variable mortgages are quoted as “prime minus X” — for example, prime − 0.50%. When the Bank of Canada changes the overnight rate, prime moves the same amount within a day or two. That's why variable mortgages can change mid-term.

Fixed rates follow Government of Canada bond yields

5-year fixed rates aren't set by the BoC at all. Lenders price them off Government of Canada 5-year bond yields plus a credit spread (~150–200 bps). Bond yields can move when BoC moves, but they can also move when inflation expectations shift — so fixed rates sometimes change without any BoC action.

Your rate is “posted minus discount”

The rates banks publish are “posted” — the never-actually-charged headline rate. The rate on your mortgage statement is the discounted rate. The discount comes from negotiation, broker channel, your credit profile, and how badly the lender wants new business this week. Discounts of 1–2 percentage points off posted are common.

Then there's the qualifying rate

Under OSFI's B-20 stress test, federally regulated lenders must qualify you at the greater of your contract rate + 2% or 5.25%. This determines how much house you can buy, even if it's not the rate you actually pay. Translates to roughly 10–15% less affordability vs. an unstress-tested calculation.

Frequently asked questions

What's the difference between the BoC overnight rate, prime, and the rate I'd actually get?

The BoC overnight rate (also called the policy rate) is what banks pay to lend to each other overnight at the Bank of Canada. Big Six prime is by long-standing convention BoC overnight + 2.20%. Variable mortgage rates are typically prime minus a discount (e.g., prime − 0.50%). 5-year fixed rates are not directly tied to BoC — they track Government of Canada 5-year bond yields plus a credit spread. So when BoC cuts, variable rates move that day; fixed rates may or may not move depending on what bond yields do.

What is the qualifying rate / stress test?

Under OSFI's B-20 guideline, federally regulated lenders must qualify you at the higher of (a) your contract rate + 2%, or (b) 5.25%. So even if your actual mortgage rate is 4.79%, the lender checks whether you could afford the payment at 6.79%. This is why the affordability number from a stress-test-aware calculator is lower than what a US calculator would say.

Posted vs discounted rates — what's the catch?

Banks publish a 'posted rate' that's typically 1–2 percentage points higher than what they'll actually charge. The discount is negotiated. Brokers usually get better discounts than going direct because they bring volume. The rates you see on lender websites are usually posted; the rate on your mortgage statement is discounted. Always ask 'what's your best discounted rate today?'

Why do Canadian mortgage rates compound semi-annually?

Section 6 of the Interest Act requires Canadian residential mortgage rates to be expressed with annual or semi-annual compounding, not in advance. Every major lender uses semi-annual. This is why a 5% Canadian mortgage and a 5% American mortgage give slightly different monthly payments — the Canadian effective monthly rate is (1 + 0.05/2)^(2/12) − 1 ≈ 0.4124%, vs the American 0.05/12 = 0.4167%. Small per payment, real money over 25 years.

Is variable better than fixed right now?

There's no universal answer — it depends on (a) the BoC's expected rate path over the next 1–5 years, and (b) your tolerance for payment volatility. Historically variable wins on average over long periods because of the term-premium fixed mortgages charge, but the worst-case for variable can be brutal in a rising-rate environment. If you're stress-testing payment shock or inside the first 5 years of homeownership, the certainty of fixed often outweighs the expected savings of variable.