Back at the start of 2019, the lowest 5-year fixed rate was 3.49%.  The market, however, shifted early February and rates started plummeting and plummeting fast.  Around that time, I had mentioned that we could potentially see 5 year fixed rates in the mid-2% range by mid-summer.

With the precipitous drop in bond yields that began early February, 5 year fixed mortgage rates plunged down a full percentage point, and are now as low as 2.49%*


Is this the bottom, however?


Fixed mortgage rates are determined by bond yields, which started to trend back upward on June 20th, before spiking abruptly on July 5th.  The spike was sharp enough that it placed instant upward pressure on fixed mortgage rates.  Lenders reacted quickly with increases across the board.  However, the increases were short-lived as the bond yields started trending back downward less than a week later.  It was these decreases that pushed mortgage rates back down to their lowest levels since July 2017. 

The bond yields then dropped steeply just before the long weekend, followed by another extreme drop at the start of the work week on August 6th.  The last time they were this low was January 2017, at which time the lowest 5 year fixed rates were 2.39%. I would say that further rate drops are now imminent, and there is a good chance that we’ll see a 2.39%* 5 year fixed by the end of this week. It’s possible that we could see them drop down even further as the year progresses.

Shorter-term rates

Ever since the mortgage regulations changed back on November 30th, 2016, 5-year terms have carried the lowest rates.  As mentioned, the lowest 5 year fixed is currently 2.49%*.  By comparison, the lowest 3-year fixed rate is 2.79%. As a result, few people are choosing shorter-term rates these days.

Variable rates

Variable-rate mortgages have almost always been lower than fixed-rate options. That isn’t the case in today’s world, however.  The lowest variable rate at the moment is prime -1.25% (2.70%)*.  While the discount is one of the largest, if not the largest discount off prime in history, the rate is still 0.20% higher than the fixed-rate alternatives.   In some cases, they can be as much as 0.50% higher.

Usually, I likely to see variable rates at least 0.50% below fixed rates before I can comfortably recommend them.  With them being higher, there are very few situations in which a variable rate mortgage would make more sense.  The last time variable-rate mortgages were higher than fixed was following the collapse of the US housing market in 2008.


*The lowest rates are found with high ratio mortgages (insured mortgages with less than 20% down payment originally), or purchases or switches with 35% or greater down payment/equity. The property value must be under $1 million OR must have been purchased prior to November 30, 2016.  If the mortgage was refinanced after this date, then that may also affect eligibility).



Paul Meredith is the author of the Amazon #1 best selling book, Beat the Bank – How to Win The Mortgage Game in Canada, and has ranked as one of the top 75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage Broker of the Year in 2018, and can be seen as the exclusive mortgage broker on season two of TV’s Top Million Dollar Agent.