About 3-Year Fixed Mortgages
The 3-year fixed has been one of the most-quoted terms in 2025–2026 because many forecasters expect the Bank of Canada to keep cutting through the next two years. Locking for three years instead of five means you get the certainty of a fixed payment now and the chance to renegotiate at lower rates in 2029 instead of 2031.
Pricing follows the 3-year Government of Canada bond yield. In most rate environments the 3-year sits between the 1-year and 5-year fixed — somewhat higher than the 1-year (because lenders charge a small premium for the extra two years of certainty) and lower than the 5-year (because their cost-of-funds curve is shorter).
Mid-term flexibility matters here. If you expect to move in roughly three years — kids changing schools, an out-of-province relocation, an upsize — a 3-year fixed neatly aligns the renewal with your life event and avoids an IRD penalty.
Pros
- Renew into a likely lower-rate environment 2 years sooner than a 5-year
- Lower break penalty than 5-year (less remaining term)
- Aligns with typical 3-year life events (move, upgrade)
Cons
- Slightly higher monthly payment than the rock-bottom 1-year fixed
- Renewal risk if rates rise instead of falling
Who it suits: Buyers who think rates will be lower in 3 years, families anticipating a move, and anyone uncomfortable with the long IRD lock-in of a 5-year.