Markets have priced in a 67-per-cent chance of a 25-basis-point rate cut when the Bank of Canada meets on Sept. 17.Darren Calabrese/The Canadian Press
Five-year mortgage terms have offered some of the lowest fixed rates for much of 2025, but that is starting to change.
Ron Butler, founder of Butler Mortgage in Toronto, said many lenders are now offering promotional rates on three-year fixed terms at around 3.6 per cent. That compares to some of the cheapest five-year fixed rates being in the low 4-per-cent range.
Mr. Butler said the drop in three-year fixed terms is a result of the three-year Canada bond yield moving lower in recent weeks, while the Canada five-year bond has stayed relatively level.
Daniel Vyner, a mortgage broker based in Toronto, said the three-year bond yield has dropped because markets still expect the Bank of Canada to cut rates in the near future. By contrast, five-year rates carry more inflation uncertainty, he said.
Meanwhile, markets are anticipating much higher chances of an interest-rate cut from the Bank of Canada this month.
Data from LSEG shows that markets have priced in a 67-per-cent chance of a 25-basis-point rate cut when the central bank convenes on Sept. 17. (There are 100 basis points in a single percentage point.)
Odds of a rate cut shot up following gross domestic product data that was released last week and showed that the economy contracted much more than expected in the second quarter of this year.
Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Sept. 4.
