Out of all available mortgage products, the 5-year fixed has historically been the most popular among mortgage borrowers. However, that changed roughly three years ago when 3-year fixed mortgage rates took the crown for the most popular mortgage product by a landslide. 

Why? 

Because rates were expected to drop, and locking into a shorter term meant borrowers could hit the reset button sooner and potentially renew into lower rates.

Fast forward to today: fixed mortgage rates have dropped over 2.00% since their peak in October 2023. Yet many people are still gravitating toward 3-year fixed rates. The thinking goes, “Rates are going to fall, so I’ll just wait it out with a shorter term.”

 But is that logic still valid?

 

Mortgage Rates Have Fallen—Now What?

Let’s look at where we’re at. The lowest 5-year fixed rate available (for insured purchases) is now sitting as low as 3.64%, while the 3-year fixed is hovering around 3.74%. These are near the lowest levels anyone expected fixed rates to go—and they may not go much lower. 

Could they dip slightly? 

Sure. 

Could we see 5-year fixed rates start with a “2” again? Highly unlikely. 

A “1”? Forget it. That was 2021’s party trick, and it’s not coming back unless the world pulls another rabbit out of the economic hat.

In the new 3rd edition of my book, Beat the Bank – How to Win the Mortgage Game in Canada (released March 2024 and updated January 2025), I mentioned that 5-year fixed rates would soon reclaim their crown as the most popular mortgage product. Well, given that fixed mortgage rates have now fallen by more than 2.00%, we’re now at that point. 

 

So Why Are People Still Choosing 3-Year Fixed?

Inertia. Momentum. Habit. Take your pick.

We’ve all been on autopilot—mortgage professionals included—saying “3-year fixed is the smart choice because rates will fall.” But at this point, that’s an outdated script. Mortgage rates have already fallen. The 3-year strategy worked for a time, but we’re not in that market anymore.

We’re now dealing with a much murkier economic outlook. Inflation, geopolitical events, trade tensions—you name it, it’s on the radar. Betting that rates will be even lower in three years is no longer a sure thing. In fact, it might be the riskiest play on the board.

 

Why 5-Year Fixed Is Back on Top

Here’s what’s changed: certainty (or lack thereof).

Three years ago, it was nearly guaranteed that rates would go down. Today? It’s a coin toss. People are now locking in for longer—not because it’s exciting, but because it’s safe.

Could something drastic push rates down again? Of course. A major health crisis. A global recession. Another geopolitical black swan. 

But here’s the flip side: any number of things could just as easily push rates up.

In other words, trying to time the mortgage market is a lot like trying to predict the next plot twist in a soap opera—there’s always something unexpected around the corner.

 

A Quick Word on the Bank of Canada

Let’s clear up a common misconception: fixed mortgage rates do not follow the Bank of Canada’s rate changes directly. They’re tied to Government of Canada bond yields, which have minds of their own.

For example, in Q4 2024, the Bank of Canada slashed rates by a full 1.00% (two back-to-back 0.50% cuts). 

And what did fixed rates do? They rose—by roughly 0.30%. Why? Because bond yields moved in the opposite direction.

Currently, bond yields have bounced off recent lows, and lenders have responded by nudging fixed rates up again. So even if the Bank of Canada cuts another 0.75% this year—as some economists expect—it doesn’t mean fixed rates will follow.

Forecasts are just that: educated guesses based on today’s tea leaves. Tomorrow’s headlines could rewrite the whole script.

 

Final Thoughts

Here’s the bottom line: if you’re still picking a 3-year fixed mortgage hoping for lower rates down the road, you’re making a speculative bet. Not a strategy. Not a plan. A bet.

Three years ago, that bet made sense. Today, it’s a gamble—and not necessarily a good one.

Yes, there are still valid reasons to go with a shorter term. Your situation might call for flexibility. You might be moving, refinancing your mortgage, or anticipating a major life change. But if you’re choosing a 3-year fixed purely because someone told you rates are going to fall again… it’s time to reassess.

While bond yields have bounced off their recent lows, that could change by next week. The trend is constantly shifting, and with it, so do the short-term fixed rate forecasts. One week, I could be saying there’s upward pressure on rates—and the very next, I might be advising of a potential drop. It’s a moving target, and that’s exactly why relying on predictions alone can be risky.

At PMT Mortgage, our salaried team is here to cut through the noise, assess your specific goals, and help you choose a mortgage strategy that fits—not just based on where rates might go, but on what works for you right now. Reach out to us today to explore your best mortgage options.