Best Mortgage Rates In Ontario For May 2024

Lender	Forbes Advisor Rating	Rates	Closing Timelines	Penalties Calculation Type	Learn More CTA text	Learn more CTA below text	LEARN MORE
Nesto Inc.		3-yr. variable: 6.35%, 3-yr. fixed: 5.34%, 5-yr. variable: 5.90%, 5-yr. fixed: 4.84%, 10-yr. fixed: 5.84%	30 days	Posted rate	View More
Dominion Lending Centres		3-yr. variable: 6.30%, 3-yr. fixed: 5.59%, 5-yr. variable: 6.30%, 5-yr. fixed: 5.09%, 10-yr. fixed: 6.14%	Undisclosed, assume a standard 30 days	Posted rate	View More
The Mortgage Centre		3-yr. variable: 6.30%, 3-yr. fixed: 5.59%, 5-yr. variable: 6.30%, 5-yr. fixed: 5.09%, 10-yr. fixed: 6.14%	Undisclosed, assume a standard 30 days	Posted rate	View More
DUCA		3-yr. variable: 7.45%, 3-yr. fixed: 6.34%, 5-yr variable: 6.95%; 5-yr. fixed: 5.29%; 10-yr. fixed: N/A	Undisclosed, assume a standard 30 days	Posted rate	View More
B2B Bank		3-yr. variable: 7.23%, 3-yr. fixed: 6.99%, 5-yr. variable: 7.22%, 5-yr. fixed: 6.84%, 10-yr. fixed: 7.49%	Undisclosed, assume a standard 3	Posted rate	View More
Laurentian Bank of Canada		3-yr. variable: 7.20%, 3-yr. fixed: 6.99%, 5-yr. variable: 6.90%, 5-yr. fixed: 6.84%, 10-yr. fixed: 7.49%	Undisclosed. Assume a requisite 30 days.	Posted rate	View More
St. Stanisclaus-St.-Casimir’s Polish Parishes Credit Union Limited		3-yr. variable: N/A, 3-yr. fixed: 5.80%, 5-yr variable: 8.70%, 5-yr. fixed: 5.50%, 10-yr. fixed: N/A	Undisclosed, assume a standard 30 days	Posted rate	View More

Rates current as of May 3, 2024.

We reviewed 100 mortgage lenders that do business both online and in-person throughout Canada. The lenders we reviewed represent some of the largest mortgage lenders by volume in Canada, which includes banks, credit unions and online lenders. Lenders that didn’t provide their mortgage rates or don’t operate in Ontario were not eligible for review.

Our conventional rates (rates that are uninsured) were generated through publicly available posted rates on the lender’s website, but also through the following borrower profiles that we presented to the lender anonymously by phone or online:

Profile 1

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $790,000
• Down Payment: 20% ($158,000)
• Credit Score: 700-719
• Postal Code: N2L 1V6 (Waterloo, Ontario)

Profile 2

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $1,300,000
• Down Payment: 20% ($260,000)
• Credit Score: 700-719
• Postal Code: V6A 2W5 (Vancouver, British Columbia)

Profile 3

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $300,000 ($60,000)
• Down Payment: 20%
• Credit Score: 700-719
• Postal Code: S4P 3C8 (Regina, Saskatchewan)

Profile 4

• Property Type: Single-Family Home
• Property Usage: Primary Residence
• Purchase Price: $440,000 ($88,000)
• Down Payment: 20%
• Credit Score: 700-719
• Postal Code: B3S 0J1 (Halifax, Nova Scotia)

Our scores out of five are scored based on the following factors:

• Rate – 75%
• Timeliness – 5%
• Prepayment privileges – 5%
• Penalty calculation type – 10%
• Availability of discounted rates – 5%

Though these rates are accurate at the time of publication, they are intended only to provide a ballpark figure and sample of the rates a lender may offer in that province for that particular mortgage term. That does not mean that you will qualify for the above rates or that the lender in question hasn’t changed those rates since publication. Please consult a mortgage lender or broker to get the best rate possible for your particular property-buying circumstance and financial situation.

Open vs. Closed Mortgage

An open mortgage offers flexibility to prepay your mortgage without penalties. In exchange, open mortgage rates tend to be higher than closed mortgage rates. Meanwhile, closed mortgages have penalties for exceeding an annual prepayment threshold.

Fixed-Rate Mortgages

A fixed-rate mortgage allows you to lock in a stable rate throughout your term. Fixed-rate mortgages are popular when borrowers expect interest rates to increase during their term. However, you’ll end up paying more interest if rates drop during your term.

Variable-Rate Mortgages

Variable mortgage rates are tied to your lender’s prime rate. In Canada, three-quarters of variable mortgages have fixed payments, according to the Bank of Canada. Unlike the adjustable-rate mortgages, or ARMs where the amount you pay each month fluctuates with prime, with an variable-rate mortgage (VRM), an increasing rate won’t adjust your payment amount, but rather decrease the portion of each payment applied towards the loan principal. While variable-rate mortgages are less popular than fixed-rate mortgages due to their potential volatility, borrowers opt for variable-rate mortgages when they expect rates to drop throughout their term.

Current average mortgage rates in Ontario are approximately:

• 5-year fixed: 5.62%
• 3-year fixed: 6.04%
• 5-year variable: 6.90%

(Rates as of March 28, 2024.)

According to Forbes Advisor Canada, currently the lowest 5-year fixed mortgage rates are offered by Nesto Inc. at 4.94%. Both Dominion Lending Centres and The Mortgage Centre offer 5-year fixed rates at 4.99%.

For a 3-year fixed term, the best rate is also with Nesto at 5.29%.

Your Down Payment

Your mortgage rate adjusts with your down payment amount. Interestingly, you’ll receive the lowest mortgage rates when your down payment is below 20%. This protects lenders because you’ll need separate mortgage default insurance from the Canada Mortgage and Housing Corporation (CMHC). Although your mortgage rate decreases, the additional insurance costs will affect your cost of borrowing. Conversely, larger down payments mitigate lender risk, leading to a reduction in your interest rate. Interestingly, lenders face the highest risk when the down payment is exactly 20%.

Your Amortization Period

Longer amortization periods typically have higher interest rates, compared to shorter ones. In addition, extended amortization periods increase your lifetime interest paid. Conversely, shorter amortization periods decrease the amount of interest paid throughout your loan, but increase your monthly mortgage payment.

Your Mortgage Term

While your amortization period is the length of time it takes to repay your loan, say 25 years, your mortgage term is the amount of time before your mortgage renews, typically one, three, five or 10 years, with the most popular term typically being five years. Historically, the longer your term, the higher the interest rate.

Property Usage

Investment properties and secondary vacation homes represent increased risks versus primary residences. Lenders offset these risks by charging you higher interest rates.

Mortgage Type

Refinancing your mortgage generally increases your interest rate compared to purchasing a new home. This is because lenders perceive new home purchases as less risky than significant alterations to an existing mortgage. The interest rate you receive upon mortgage renewal is contingent on both your creditworthiness and the prevailing market conditions at the time of renewal.

Your Employment Status

Lenders favour a stable employment history, especially permanent positions, indicating financial stability and a reliable income. Self-employed and contract workers need extra documentation to secure a good interest rate.

Your Credit Score

A higher credit score can result in lower mortgage rates. In Canada, most mortgage lenders want to see a score exceeding 680. Anyone with a score below that number will likely need to work with private lenders, who have much higher interest rates.

Your Debts

Lenders assess your ability to make mortgage payments using two key ratios: Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS). Lower ratios signify that your income can sufficiently cover payments, enhancing your eligibility for a mortgage. In Canada, the typical maximum GDS and TDS ratios are 39% and 44%, respectively.

According to the Ontario Real Estate Association (OREA), the average home price in the province (as of February 2024) is $873,207. At a minimum, potential homeowners need to put down 5% of the first $500,000, and 10% of the remaining amount up to $999,999. (Purchases over $1 million require a 20% down payment.) So that average-priced home requires a down payment of 7.20%, or $62,871.

Keep in mind that down payments below 20% require additional mortgage default insurance. Once you factor in the cost of the mandatory insurance, which if purchased from CMHC (the most common provider), adds another $32,413, you’ll have an outstanding mortgage of $842,749. To decrease your mortgage size, you’ll need to increase your down payment.

Key Facts About the Ontario Market

1. The best-performing property market in Ontario, over the past five years, is the GTA.

2. Thunder Bay is the most affordable city in Ontario, with an average price of $302,200.

3. Single-family homes are still the best-performing asset class in Ontario.

About the Ontario Housing Market

The Ontario housing market is experiencing a notable slowdown, according to recent figures from the OREA, with home sales 21.3% below the five-year average and 15.3% below the 10-year average, though activity is heating up in the first two months of 2024. On a year-over-year basis, home sales are up 18.2%. There was an increase of 26.8% of new listings year-over-year.

It’s important to note that Ontario’s property market remains the second most expensive in Canada. However, this recent pricing shift has contributed to a more balanced market, providing potential buyers with a more favourable environment with something new—options.

How Do I Get the Best Mortgage Rate in Ontario?

Boosting your creditworthiness is crucial for securing the best mortgage rate in Ontario. You can achieve this through timely payments and responsible credit management. Once you’ve improved your credit profile, be sure to compare various lenders to identify competitive rates. One appealing option that many borrowers consider is the 3-year fixed mortgage due to its favourable terms.

Ontario borrowers and brokers operate within a regulated lending framework overseen by the Financial Services Regulatory Authority (FSRA). The FSRA’s goal is to ensure accountable and transparent mortgage transactions. They act as a centralized authority, providing comprehensive licensing and compliance requirements, regulatory updates and educational resources for mortgage brokers, agents, brokerages and administrators.

Ontario Mortgage Lender Regulations

The Mortgage Brokerages, Lenders and Administrators Act is an Ontario law that oversees the mortgage industry. It requires companies and individuals who deal with mortgages to have a licence.

Another key element is that mortgage brokers must clearly show borrowers how much it will cost to get a mortgage from them. The FSRA can investigate and penalize licensed mortgage lenders if they break the law. There are fines and jail penalties for serious offences.

Ontario Mortgage Broker Regulations

A mortgage broker connects you with a lender. As of April 1, 2023, the FSRA has streamlined the process for criminal record checks, designed to promote a secure and transparent environment for borrowers.

There are three key ways to save on your mortgage in Ontario:

Take advantage of prepayment privileges: Most closed mortgages allow you to make a lump sum payment, between 10% and 20% on the original principal, once per year without penalty.

Accelerate your payments: Opting for bi-weekly payments, for example, adds an extra month’s payment each year.

Take advantage of falling interest rates: If you have a convertible mortgage, switch to a new lower rate at the end of your initial term. Or, if your mortgage is coming to maturity, talk to your broker about whether a variable or fixed-rate mortgage at a lower rate makes sense.

Ontario offers various first-time home buyer programs. Notably, this includes the Ontario Land Transfer Tax Refund that can refund you up to $4,000. Toronto residents can further reduce closing costs through the First-Time Purchaser Rebate, potentially saving a total of $8,475.

Several Ontario municipalities, including Niagara, Kingston, Simcoe, Region of Waterloo, Chatham-Kent,District of Muskoka, Brantford, and Dufferin County have homeownership incentive programs. They can provide down payment assistance and forgivable loans based on income and property value.

On a Federal level, Canada offers various programs such as the First-Time Home Buyer Incentive, the Home Buyers’ Plan and the new First Home Savings Account (FHSA).

However, as of March 31, 2024, the First-Time Home Buyer Incentive will be discontinued. The deadline for new or updated submissions was March 21, 2024 at midnight eastern time. Read our Feds Scrap First-Time Home Buyer Incentive Program news article to learn more.