Thanks To USA, Sorta: Falling Five-Year Fixed Mortgage Rates
Image courtesy of Toronto Star
Canada is currently experiencing a welcome dip in five-year fixed mortgage rates, hitting some of the lowest levels seen in 2025. This trend is partly due to a weakening U.S. economy, which is influencing Canadian bond yields—the main driver behind fixed mortgage rates. If you’re planning to buy a home or renew your mortgage, understanding the reasons behind these rate changes and how they may benefit you is essential.
Why Are Five-Year Fixed Rates Falling?
While variable mortgage rates tend to move more directly with the Bank of Canada’s key interest rate decisions, fixed mortgage rates are tied to bond market activity. Recently, bond yields have been falling due to concerns about rising unemployment and a growing federal deficit in the U.S. This lower confidence in the economy causes bond prices to rise and yields to fall, which translates into cheaper borrowing costs for fixed-rate mortgages in Canada.
According to Ratehub.ca, the lowest five-year fixed mortgage rate currently available is about 3.79%, a level not seen since earlier in the year. Mortgage experts like Ron Butler describe this as “probably the lowest point this year,” highlighting a favorable borrowing environment for those seeking fixed-term certainty.
How Does This Affect You?
Imagine you and your partner are looking to buy your first home in the Greater Toronto Area. With rates dropping, you now have the option to lock in a five-year fixed mortgage at a historically competitive rate of around 3.79%. This means your monthly payments could be lower or stretch further—allowing you to afford a larger or better-located home without increasing your monthly budget.
Phil Soper, president and CEO of Royal LePage, explains that this dip in fixed rates could practically free up cash for many families, creating opportunities to either save more or upgrade their home purchase within the same payment range.
Fixed or Variable? Choosing What’s Right for You
Experts often debate whether buyers should opt for fixed or variable rates. Variable rates are generally cheaper over the long term but come with payment uncertainty, which may not suit everyone’s comfort level.
Phil Soper points out that variable mortgages might appeal to those who can handle the stress of fluctuating payments, especially now that the central bank has cut interest rates to support the economy amid U.S. trade uncertainties.
On the other hand, fixed-rate mortgages provide a built-in “insurance premium” because they lock in your interest rate and monthly payments for the term, offering peace of mind and predictability. Tyler McLay, president of Tyler McLay Realty Group, adds that fixed rates especially suit salaried individuals and those valuing stable monthly expenses.
For example, if you have a steady income or a tight budget, opting for a five-year fixed mortgage at today’s rates could protect you from future rate hikes, helping you plan confidently for the years ahead.
What to Do Next
Start shopping for your mortgage or renewal now while rates are favorable.
Evaluate your financial comfort with fluctuating payments (variable) versus fixed payments.
Consider working with a mortgage professional who can tailor recommendations to your unique situation and local market trends.
If you’re wondering whether to lock in a falling fixed-rate mortgage or take advantage of variable-rate cuts, let’s chat. I’m Mr. Mortgage (Kechanth Kannan) and I’m here to help you navigate the options and find the mortgage that fits your lifestyle and budget.
📸 Instagram: @_mrmortgage
Getting informed now means smarter decisions and a more secure path to homeownership—let’s make it happen together!
