About 5-Year Fixed Mortgages
More than half of Canadian homeowners choose a 5-year fixed mortgage. The reason is simple: predictability. From the day you close, your principal-and-interest payment stays the same for 60 months, which makes household budgeting straightforward and removes the stress of watching central-bank announcements.
Fixed rates in Canada are priced off the 5-year Government of Canada bond yield. When bond yields rise — typically because investors expect higher inflation or a stronger economy — fixed mortgage rates follow within days. When yields fall, lenders compete by passing the savings on. RATECORE polls our lender network daily so the rate you see is what's actually available right now.
The trade-off for that stability is reduced flexibility. Breaking a 5-year fixed mortgage early — to move, refinance, or switch lenders — usually triggers an Interest Rate Differential (IRD) penalty that can run into the tens of thousands of dollars at a Big-6 bank. Monoline lenders (the kind RATECORE works with) often calculate IRD more fairly, but the lock-in cost is real and worth understanding before you sign.
If you're confident you'll stay in the home for the full term, plan to make standard prepayments, and want to set-and-forget your housing cost, the 5-year fixed is hard to beat. If you might move within 2–3 years, look at a 3-year fixed or a variable instead.
Pros
- Lowest long-term volatility — payment is fixed for 60 months
- Qualifies you for the largest mortgage at the stress test
- Predictable budget — no rate-hike surprises
- Most lenders compete hardest on this term, so rates are typically the lowest fixed
Cons
- Highest break penalty if you exit early (IRD)
- Locked in if rates fall significantly during your term
- Less flexibility to switch lenders mid-term
Who it suits: Buyers planning to stay 5+ years, anyone who'd lose sleep over rate changes, and households with tight monthly budgets that need certainty.