Best 3-Year Fixed Mortgage Rates In Canada For 2025

The average 3-year fixed posted mortgage rate currently offered by Canada’s Big Six Banks is 6.54%, according to the Bank of Canada. Special rates may be available.

Rates as of March 19, 2025

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, which includes banks, credit unions and online lenders. Lenders that didn’t provide their mortgage rates or operate in fewer than four provinces or territories were not eligible for review.

Our rates 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 based on the following factors:

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

Please do not take the rates posted here as gospel. They are intended to only offer a ballpark and sample of the rate a lender may offer for that particular mortgage term. That does not mean that you will qualify for the above rates or that they haven’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.

Fixed-rate mortgage rates are priced off of Government of Canada 5-year bond yields that fluctuate daily. Five-year fixed mortgage rates are typically 1.5% above the 5-year yield, though this spread can vary between 1% and 2%. This means if bond yields go up, fixed-rate mortgage rates also go up. Periods of high inflation (which occur when the CPI is above the Bank of Canada’s 2% target) cause bond yields to rise; conversely, when inflationary pressures cool, bond yields also come down. For example, in 1981 when the CPI averaged 12.5%, Canada experienced the highest inflation in 33 years. In September 1981, bond yields hit 18.78% and the 5-year fixed mortgage rate hit 21.75%.

As of March 24, 2025, the 5-year benchmark bond yield is 2.669%, down 85.17 basis points (or 0.8517%) from one year ago and down 29.52 basis points this year.

Variable-rate mortgages are affected by the Bank of Canada’s (BoC) monetary policy, namely interest rate hikes and cuts that occur eight times a year. The prime rate, or the rate the banks use to set the interest rates on their variable-rate products, is currently 4.95%, though some banks may post a different rate. For example, TD Bank’s prime mortgage rate is currently 5.10%. Variable rates will be quoted as plus or minus compared to the prime rate.

On June 5, 2024, the Bank of Canada cut its key interest rate by 25 basis points to 4.75%, its first rate cut in over four years. Then, on July 24, the central bank cut rates by another 25 basis points to 4.5%, again on September 4 to 4.25%, and then by 50 basis points on October 23 to 3.75%. On December 11, the Bank cut rates by another 50 basis points to 3.25% and again, on January 29, 2025, the bank cut rates to 3%. Most recently, on March 12, the Bank cuts rates to 2.75%. The BoC is widely expected to implement more rate cuts in 2025.

Related: How Mortgage Rates And Interest Rates Work

According to the most recent (February 2025) Monthly Housing Market Report from the Canadian Real Estate Association (CREA), national home sales dropped 9.8% month-over-month in February 2025 and 12.7% compared to the same period last year. This marks the lowest level for home sales activity since November 2023 and the largest month-over-month decline since May 2022.

“The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last. This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity,” noted Shaun Cathcart, CREA’s Senior Economist. “This is already being reflected in renewed price softness, particularly in Ontario’s Greater Golden Horseshoe region.”

Declines were broad-based, noted the report, with sales falling in about three-quarters of local markets and almost all large markets, with the most pronounced drops in the Greater Toronto Area and surrounding Golden Horseshoe regions.

There were 146,250 properties listed for sale across Canada at the end of February 2025, up 13.1% from the same time last year but below the long-term average of 174,000. 

“The uncertainty of the last few weeks seems to be causing some buyers to think twice about big financial decisions right now,” noted James Mabey, CREA Chair. “For others, a softer pricing environment and now lower interest rates will be a buying opportunity.”

The national average price was $668,097 in February 2025, down 3.3% year-over-year. 

As of March 24, 2025.

A conventional fixed-rate mortgage locks in an interest rate for the full mortgage term, providing predictability in monthly payments and ensuring the interest rate on your mortgage will not go up or down for the duration of the term. To qualify as conventional, borrowers must make at least a 20% down payment. Anything less requires mortgage insurance from CMHC or private insurers, adding to costs.

A three-year fixed mortgage holds the same interest rate for the entire 36-month term. Afterward, borrowers can either sign up for a new term at the current mortgage rate or switch to a variable-rate mortgage. Often, borrowers opt for a three-year mortgage term when they expect mortgage rates to drop in the near future because the term is short and won’t lock them into a rate for a long-time.

A three-year fixed-rate mortgage allows you to save money by renewing at lower market rates faster than a 5-year fixed-rate mortgage.

What Drives Changes in 3-Year Fixed Mortgage Rates?

The Government of Canada’s three-year bond yields influence three-year fixed mortgage rates. When bond yields rise, fixed mortgage rates follow suit. Conversely, when yields decrease, rates also decline.

As market expectations for higher interest rates grow, investors demand higher yields on bonds, causing an increase in three-year fixed mortgage rates. Conversely, when expectations shift toward lower interest rates, bond yields decrease, leading to a decline in mortgage rates.

However, the correlation between bond yields and mortgage rates is not perfectly synchronized. When determining rates, lenders consider additional factors such as the bond-mortgage spread and marketing strategies.

Is a 3-Year Fixed-Rate Mortgage Right for You?

Opting for a three-year term could be strategic if you anticipate a decline in interest rates sooner rather than later. This allows you to renew at a potentially lower rate. Furthermore, this choice is particularly advantageous if your life plans undergo a shift within the next few years.

Another big benefit of a three-year term is if you intend to pay a substantial portion of your mortgage between renewals. You can typically pay more than 20% without incurring penalties, which helps you save on interest and avoid additional costs.

The cost of prepayment penalties for early exit from your mortgage contract is typically comparable with a three-year mortgage to a five-year mortgage. However, you’ll be forced to renew into higher market rates faster if interest rates rise during your term. Exercise caution, especially if it looks like interest rates are on an upward trend.

Pros and Cons of a 3-year Fixed-Rate Mortgage

Pros

• Flexibility: After three years, you can change to a potentially better rate without breaking your mortgage contract and paying a penalty.
• Predictable Cost: Opting for a three-year fixed-rate mortgage ensures you know your mortgage payments for the entire period, simplifying budgeting and facilitating long-term financial planning.
• Potential for Lower Rates: If interest rates drop during the three-year period of the term, you can renew into lower rates sooner than you could with a five-year fixed-rate mortgage.

Cons

• Less Rate Stability: Offers less stability for a shorter period of time than mortgages with longer terms, Plus, monthly payments may increase at renewal if interest rates rise during your term.
• Potential For Penalties: Selling before your mortgage term ends can lead to prepayment penalties, particularly with a fixed-rate mortgage. These penalties can be challenging, especially if you’re not selling your house and lack additional funds to cover the costs.
• More Frequent Renewals: Requires more frequent mortgage renewals, potentially resulting in additional costs such as appraisal and legal fees.

The amortization length is the total time needed to repay your mortgage fully. It contains mortgage terms, which are commonly three to five-year payment contracts. At the end of each term, you renew into a new payment contract until you fully pay off your mortgage balance.

In Canada, the maximum amortization is 25 years with a down payment of less than 20% and up to 30 years with a down payment exceeding 20%. (As of December 15, 2024, the federal government allows 30-year amortizations on insured mortgages for all first-time homebuyers and to all buyers of new builds.)  Opting for a shorter amortization period reduces the interest you pay over the course of your mortgage. However, it increases your monthly payments.

Fees

Some lenders lure you in with a low interest rate but charge high back-end fees. While certain fees like appraisal fees for mortgage renewals are standard, be careful to compare the true cost of borrowing between lenders.

Having a clear conversation with your lender is crucial. Inquire about the annual percentage rate (APR), which reflects the true cost of borrowing. Seek to understand the specific fees and their amounts before finalizing your mortgage contract.

Prepayment Penalties

Prepayment penalties apply only to closed mortgages. Conversely, open mortgages allow full payment at any time. Exceeding your monthly payment or the permitted percentage of annual prepayment privileges on a closed mortgage incurs a penalty.

With fixed-rate mortgage penalties, lenders typically charge more than three months’ interest or the interest rate differential (IRD). Calculated using posted rates, the IRD may be higher than your actual rate, potentially resulting in increased short-term interest payments.

Portability

A portable mortgage lets you seamlessly transfer it to a new home without penalty. If your new home is less expensive than the previous one, you retain your existing mortgage interest rate. In the case of a more expensive new home, your lender may provide a blended interest rate or allow the addition of a second mortgage to cover the difference.

Homeowners don’t receive cash back in a portability arrangement. If the mortgage is more expensive than the new home, they typically need to cover the difference or refinance altogether.

Open vs. Closed Mortgages

Three-year fixed-rate mortgages, like all fixed-rate mortgages, are typically categorized as closed mortgages. A closed mortgage means you can only prepay a certain amount of your mortgage principal annually. Usually, you’re limited to no more than up to 20% of your mortgage principal with penalties for exceeding this threshold.

Conversely, an open mortgage has more flexibility. You can prepay your mortgage as desired without penalties. The primary drawback is that open mortgage rates are usually higher than closed mortgages. You pay a premium for the flexibility.

A fixed-rate mortgage maintains a constant interest rate throughout the term, whereas a variable-rate mortgage interest rate fluctuates with changes in the prime rate. Both models have their pros and cons.

Fixed-rate mortgages offer predictability, as your interest rate remains unchanged for a set period, even if the Bank of Canada adjusts the overnight interest rate. However, you can’t capitalize on savings if the market interest rates decrease during your term.

While most Canadian variable-rate mortgages have a fixed monthly payment, when interest rates rise, a larger portion of each payment goes towards interest. This can potentially put you behind your amortization schedule. At renewal, borrowers may need to either extend their amortization or make a higher monthly payment.

Here are the lowest 3-year fixed rates in Canada for the last five years compared to 1-year, 5-year and variable-rate mortgages, as posted by the chartered banks.

	1-YEAR FIXED	3-YEAR FIXED	5-YEAR FIXED	VARIABLE RATE
2023	6.29%	6.14%	6.49%	4.95%
2022	2.79%	3.49%	4.79%	2.54%
2021	2.79%	3.49%	4.79%	1.82%
2020	3.09%	3.59%	4.79%	1.88%
2019	3.64%	3.94%	5.19%	2.78%

Source: Bank of Canada

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