What is the Current Mortgage Rate in Ontario?

Toronto, Ontario is the heart of Canada’s financial world.  You will find all the major banks and many of the major credit unions such as DUCA Financial Services Credit Union, Meridian Credit Union, Alterna Bank and Credit Union. 

There are also many small lenders, credit unions, and real estate brokers in Ontario. Until September 16, 2024, Ontario offered interest rates of 4.69% for 3-year fixed mortgages and 4.19% for 5-year fixed mortgages.

Well, with so many options available, remember that the best mortgage isn’t just the lowest. It’s a rate tailored to your needs and financial situation.

However, mortgage rates are one of the major factors affecting home-buying decisions. In Ontario, where real estate is a huge investment, it’s important to stay up to date with the latest mortgage rates. 

So, if you’re buying your first home, refinancing, or renewing your mortgage, knowing the current mortgage rates in Ontario can help save you money

What Are Mortgage Rates?

 Mortgage rates are the interest charges on a home loan, expressed as a percentage of the total loan amount. 

The lower the rate, the less interest you'll pay over the life of your mortgage, which means more savings for you.

Mortgage rates in Ontario can vary depending on the type of mortgage you choose, the lender, and other economic factors.

Current Mortgage Rates in Ontario (2024)

As of September 2024, the average mortgage rates in Ontario are:

5-Year Fixed Rate: 4.19%

5-Year Variable Rate: 5.3%

1-Year Fixed Rate: 5.75

These rates are averages and can differ slightly based on the lender and your financial profile.

August 2024 Insights: Ontario Housing Market Update

On August 15, 2024, the Canadian Real Estate Association (CREA) released the latest July data on the national housing market. This includes sales activity, average prices, and overall supply.

The data shows a quiet July in the Ontario housing market. Buyers are waiting for lower interest rates as the Bank of Canada cuts rates. Ontario saw 14,858 homes sold in July. 

This is fewer than June’s 16,060 sales but a 2.9% increase from last year. The market saw 37,198 new residential listings in July. This is a 15% increase from last year but less than June’s 39,164.

The high number of new listings and slow demand have lowered the average home price in Ontario. In June 2024, the average price was $884,761, down from $890,634 in May. This represents a 2.3% decrease from last year.

CREA notes that an SNLR between 45% and 65% indicates a balanced market, while lower numbers show a buyers’ market.

Type of Mortgage in Ontario: Fixed vs. Variable Mortgage Rates

You have two main types of mortgage rates to choose from:

1. Fixed Mortgage Rates: With a fixed rate, your interest rate remains the same for the entire term of your mortgage, typically 5 years. This option is ideal if you prefer stability and predictability in your payments.

2. Variable Mortgage Rates: With a variable rate, your interest rate can fluctuate depending on the Bank of Canada's prime rate. If the prime rate goes up, your mortgage rate will also increase. If it goes down, you could save money.

In 2024, fixed rates have been slightly lower than variable rates, making them a popular choice for many homebuyers.

What are the Key Factors Affecting Mortgage Rates?

Are you looking for current or commercial mortgage rates in Ontario? Remember it is not the same in all periods. It will change as per bank policy, economic growth, etc. Several factors impact mortgage rates in Ontario:

1. Bank of Canada Interest Rates

The Bank of Canada sets a benchmark interest rate that influences mortgage rates across the country. When the Bank of Canada increases its interest rates, mortgage rates rise. Conversely, if the bank lowers its rates, mortgage rates may also decrease.

 2. Economic Conditions

Economic factors such as inflation, employment rates, and global market trends also affect mortgage rates. For instance, rising inflation has contributed to higher rates in 2024 as the Bank of Canada tries to control inflation by increasing its benchmark rate.

3. Housing Demand

In a high-demand housing market like Ontario’s, lenders may adjust their rates based on the number of people applying for mortgages. When demand for housing is high, lenders may offer lower rates to attract more customers. However, when demand slows down, rates may increase.

4. Your Credit Score and Financial History

Your financial situation can also impact the mortgage rate you're offered. A high credit score shows lenders that you’re a reliable borrower, which could help you secure a lower rate. On the other hand, if you have a lower credit score or unstable income, lenders may offer you a higher rate to compensate for the risk.

What to Expect for Mortgage Rates in the Coming Months?

Mortgage rates in Ontario are predicted to remain upgraded in the short term. The Bank of Canada has signaled that it may not lower interest rates until inflation is well under control, which may take several months or even longer.

However, some economists believe that by mid-2025, we could start seeing mortgage rates slowly decrease as inflation stabilizes and economic growth returns to normal levels.

For now, if you are looking to buy a home or refinance your mortgage, it’s important to plan for higher rates and budget accordingly.

So, if you find the right mortgage, compare offers from different lenders and talk to a mortgage broker. They can help you understand the different options and choose the one that’s best for you.