The term is the period of time that your mortgage contract is valid for. For example, the interest rate for a 10-year term is determined based on the 10-year government bond yield. Different mortgage terms have different interest rates because interest rate for a mortgage term depends on the government bond yield of the same maturity. The most common mortgage term is 5 years, with it accounting for 47% of all fixed-rate mortgages in May 2022, but mortgage term lengths can be for as little as 6 months or as long as 10 years. As always, make sure to have the proper documentation for mortgage applications. This includes the mortgage term length, whether it is insured/high-ratio or not, and your credit score and credit history. Your mortgage rate will also be affected by certain factors that your mortgage lender will look at. This allows you to be partially protected from rate hikes, while partially benefiting should rates decrease. With a hybrid/combination rate, you’ll have a fixed rate for a certain portion of your mortgage balance, and a variable rate for the remaining portion. While less common, there are also hybrid/combination rate mortgages in Canada. Since then, rapidly rising Canadian interest rates have made variable mortgages unpopular, with only 4.6% of new mortgages in July 2023 having a variable interest rate. By the start of 2022, 56.9% of all new mortgages had a variable interest rate, a stark contrast to 24.7% of new mortgages having a variable rate in early 2021. This changed in late 2021, when variable rate mortgages became more common due to low variable rates and high fixed rates. Fixed rates are historically the most common, followed by variable rates. These mortgage rate options will affect how your interest rate changes over time. Each mortgage typically has the selection of two different rates: There are many different types of mortgages in Canada. What Affects Your Mortgage Rate in Canada? Closed mortgage rates are lower than open mortgage rates, but open mortgages allow you to make principal prepayments of any amount without mortgage penalties.Typically, longer mortgage term lengths have a higher mortgage rate compared to shorter mortgage terms, but in the second half of 2022 and in 2023, there is an inversion, meaning that longer mortgage term lengths have a lower mortgage rate compared to shorter mortgage terms.Insured mortgages have a lower mortgage rate compared with conventional or uninsurable mortgages, but you’ll need to pay for mortgage default insurance.However, because of the forecast for 2023 mortgage rates and expected 2024 mortgage rates, shorter-term fixed rate mortgages are increasing in popularity. 5-year fixed mortgages used to be the most popular mortgage in Canada.The best option depends on where you think interest rates are headed. Variable mortgage rates have historically performed better than fixed mortgage rates, while fixed-rate mortgages have recently performed better over the past year.

The basket of 11 lenders includes: CIBC, BMO, TD, Scotiabank, RBC, National Bank, HSBC, Desjardins, nesto, Tangerine, First National The average 5-year variable insured mortgage rate is 6.84%, which is 4 bps higher than 30 days ago.The average 3-year variable insured mortgage rate is 7.42%, which is 0 bps higher than 30 days ago.The average 10-year fixed insured mortgage rate is 7.11%, which is 15 bps higher than 30 days ago.The average 7-year fixed insured mortgage rate is 6.81%, which is 19 bps higher than 30 days ago.The average 5-year fixed insured mortgage rate is 6.22%, which is 18 bps higher than 30 days ago.The average 4-year fixed insured mortgage rate is 6.61%, which is 16 bps higher than 30 days ago.The average 3-year fixed insured mortgage rate is 6.80%, which is 20 bps higher than 30 days ago.The average 2-year fixed insured mortgage rate is 7.20%, which is 19 bps higher than 30 days ago.The average 1-year fixed insured mortgage rate is 7.77%, which is 18 bps higher than 30 days ago.Based on a basket of 11 lenders in Canada, as of October 20, 2023:

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