Canada's Five-Year Fixed Mortgage Rates Dip Below 4%

Mortgage costs in Canada eased slightly in early July, with the lowest available insured five-year fixed rate slipping back below 4% to around 3.94%, according to rate-comparison data. Variable-rate mortgages remained the cheaper option, with the best five-year variable rate near 3.45%. The backdrop is a Bank of Canada that has held its overnight policy rate at 2.25% for several consecutive decisions, leaving the major banks' prime rate unchanged, as policymakers weigh a soft domestic economy against inflation pressures fueled by higher oil prices. Fixed mortgage rates, which are tied more closely to government bond yields than to the central bank's policy rate, have stayed elevated because those yields remain high amid geopolitical tension and uncertainty over trade, including the coming review of the North American trade agreement. Most economists expect the policy rate to remain broadly stable through 2026, though some see the risk tilting toward an eventual hike rather than further cuts. For borrowers, the modest dip offers some relief, but many households renewing loans taken out at pandemic-era lows still face materially higher payments.