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Your Guide to the Best Mortgage Rates in Ontario

Let’s first take a look at current mortgage rates in Ontario for various types of mortgages.

First Mortgage

The term “first mortgage” refers to the initial loan you secure to purchase a home. You may also hear it referred to as the “primary lien.”

FIXED RATE

RateTerm
1.74%5-year
1.98%2-year
1.99%3-year
2.14%4-year
2.34%7-year
2.84%6-year
2.99%10-year

VARIABLE RATE

RateTerm
1.60%5-year
2.35%3-year

FIRST MORTGAGE RATE TRENDS IN ONTARIO

Mortgage Renewal

If you’re unable to repay your mortgage during the originally agreed-upon term, you can work with your lender to renew the loan. Your interest rate will likely change during this process depending on how much time you need to finish paying the loan.

FIXED RATE

RateTerm
1.74%5-year
1.98%2-year
1.99%3-year
2.14%4-year
2.34%7-year
2.84%6-year
2.99%10-year

VARIABLE RATE

RateTerm
1.60%5-year
2.35%3-year

Mortgage Refinancing

Mortgage refinancing is the process of renegotiating your existing loan. For example, if you secured a mortgage years ago when rates in Ontario were higher, you might refinance to take advantage of today’s better rates. You may also want to refinance your mortgage if you want to borrow additional money at a low interest rate using your home equity.

FIXED RATE

RateTerm
2.04%5-year
2.14%4-year
2.69%7-year
2.84%6-year
3.09%10-year

VARIABLE RATE

RateTerm
1.85%5-year
3.20%3-year

Home Equity Loan

A home equity loan allows you to use funds you’ve already paid towards your mortgage as collateral. Learn more about home equity loans work here.

Rate*Term*
5.76%2-year

*Please note that this rate is based on a $35,000 home equity loan from Alpine Credits. This loan would have an APR of 13.10%. Click here to learn more about our rates and get a quote.

Ontario Mortgage Rate Market Overview

Canada’s big five banks (RBC, Bank of Montreal, CIBC, Scotiabank, and TD) are all headquartered in Ontario. The province is also home to the most bank branches in Canada, according to Statista. Additionally, Ontario’s population and burgeoning real estate sector make it a very attractive market for online lenders.

This level of competition explains why you’ll find some of the nation’s lowest mortgage rates in Ontario.

Average House Prices Throughout Ontario

The following data (from the Canadian Real Estate Association’s National Price Map) will help you estimate how much of a mortgage you’ll need in various Ontario cities as of 2020.

CityAverage House PriceChange from Last Year
Barrie & District$526,000+12%
Brantford$569,426+21.7%
Cambridge$502,274+20.4%
Durham Region$705,926+17.2%
Greater Toronto$880,400+10%
Guelph$611,700+11.3%
Hamilton-Burlington$687,000+12.9%
Kingston$458,026+15.2%
Kitchener-Waterloo$640,238+23.7%
London & St. Thomas$485,802+19.6%
Niagara Region$473,500+13.4%
Oakville-Milton$1,105,300+8%
Ottawa$506,700+18.4%
Peterborough & the Kawarthas$536,280+14.26%
Quinte$458,564+24.2%
Sudbury$308,912+14.4%
Thunder Bay$277,081+12.2%
Windsor-Essex$411,081+22.9%

Historical Ontario Mortgage Arrears Statistics

When shopping for a mortgage in Ontario, it’s important to consider the province’s economic health. Mortgage arrears statistics are helpful in this regard because they tell you exactly how many homeowners are unable to meet their obligations in the current market.

Here’s a look at the most recent decade’s data, as reported by the Canadian Bankers Association.

DateTotal MortgagesMortgages in ArrearsPercentage in Arrears
20104,189,35518,1770.43%
20114,312,56816,5560.38%
20124,393,44914,3740.33%
20134,605,98014,5220.32%
20144,654,56013,2690.29%
20154,692,24312,7530.27%
20164,705,71312,9910.28%
20174,775,83711,4140.24%
20184,759,20311,6570.24%
20194,788,08911,2150.23%

The low percentage of mortgages in arrears suggests stability throughout Ontario’s housing market.

Tips for Finding the Best Mortgage Rates in Ontario

Now that you know what the typical mortgage rates in Ontario are, let’s discuss how you can secure the best rate.

Choose Your Type of Mortgage Wisely

It’s very important to choose a mortgage that suits your circumstances.

For example, if you’re purchasing a second property, a home equity loan on your first may be a very convenient and reasonable means of financing. This is because a first mortgage on a second home, especially for investment purposes, will typically come with a very high interest rate.

Because everyone’s situation is unique, you should speak with a licensed mortgage advisor before settling on a particular loan. Find out how to get in touch with an Alpine Credits advisor here.

Consider Online Lenders

As we demonstrate on our rate comparison page, online lenders like Alpine Credits strike a good balance between reasonable interest rates and convenience.

While banks may promote lower interest rates, the actual quote you receive may be much higher if your credit rating is anything other than superb.

Improve Your Credit Score by Consolidating Debt

If you’re looking to purchase a second home but have less-than-ideal credit, it may be worth looking into a home equity loan for the purpose of debt consolidation.

While debt consolidation won’t improve your credit score overnight by any means, it can make high-interest debt more manageable.

Your interest rate on a home equity loan may also be better than on those other types of debt since it is a secured loan. By contrast, most types of personal loans are unsecured.

Take Advantage of Ontario First-Time Homebuyer Programs

Federal, provincial, and municipal governments have recognized challenges faced by first-time homebuyers. In response, they’ve created programs that help new hopeful property owners. Two popular programs include the following.

Ontario Land Transfer Tax Rebate

The Ontario Land Transfer Tax Rebate effectively waives the namesake tax on property purchases for first-time homebuyers. It’s important to note that qualification for the rebate depends on you and your spouse never having owned property anywhere in the world.

The rebate returns as much as $4,000 to qualifying participants.

Ontario’s land transfer tax is progressive, with rates for each bracket being as follows.

Home Value at PurchaseRate
$0-$55,0000.50%
$55,000-$250,0001.00%
$250,000-$400,0001.50%
$400,000-$2,000,0002.00%
$2,000,000 and above2.50%

Toronto Land Transfer Tax Rebate

The Toronto Land Transfer Tax Rebate is similar to Ontario’s, except with an even higher cap of $4,475. Additionally, you can combine these two rebates to save a maximum of $8,475 on your home purchase.

Toronto’s land transfer tax is also progressive, with rates being as follows.

Home Value at PurchaseRate
$0-$55,0000.50%
$55,000-$250,0001.00%
$250,000-$400,0001.50%
$400,000-$2,000,0002.00%
$2,000,000 and above2.50%

Factors Affecting Mortgage Rates in Ontario

Next, let’s look at the factors that impact rates. These explain why quotes you’ve personally received may differ from market averages.

The Prime Rate

The prime rate is the figure set by central banking authorities based on monetary policy. In other words, it’s beyond your control.

Here’s how Canada’s prime rate has changed over the past 10 years.

DateRateChange from Previous
April 1 20202.45%-0.50%
March 18 20202.95%-0.50%
March 11 20203.45%-0.50%
October 31 20183.95%+0.25%
July 11 20183.70%+0.25%
January 24 20183.45%+0.25%
September 13 20173.20%+0.25%
July 19 20172.95%+0.25%
July 22 20152.70%-0.15%
January 28 20152.85%-0.15%
September 15 20103%+0.25%
July 21 20102.75%+0.25%
June 2 20102.5%+0.25%

CANADIAN PRIME RATE TRENDS

Your Type of Mortgage

When looking at types of mortgages, there are three things to consider: fixed-rate, variable-rate, and the mortgage’s purpose (i.e. buying a primary residence or investment property).

Fixed-Rate

A fixed-rate mortgage, as the name would suggest, sees you paying the same interest rate for the duration of your term. These rates are typically higher to compensate lenders for the increased risk.

This risk comes in the form of potential prime rate changes. If the Bank of Canada raises its policy interest rate above your fixed-rate, your mortgage lender will have essentially sold you a loan at less than market value.

Fixed-rate mortgages are not always more costly than variable ones; recently in Canada, we’ve seen fixed rates dip below their variable counterparts.

Variable Rates

Variable rates can fluctuate over your mortgage term; they do so along with the prime rate.

Variable-rate mortgages are typically structured with interest rates of a certain percentage above or below prime. For example, you might pay prime + 0.50%. The prime rate is where the variable aspect comes in; your rate’s relationship to prime will typically stay the same throughout your term.

Because variable mortgage rates shift with the prime rate, lenders take on less risk. As such, some of the best mortgage rates in Ontario are variable.

The Mortgage’s Purpose

You’ll typically find the best mortgage rates in Ontario when shopping for a new home or refinancing an existing mortgage. This, again, reflects the level of risk lenders take on.

According to the Canadian Bar Association, first mortgages take priority above other liens on the property. That’s why you’ll find higher Ontario mortgage rates for refinancing and securing a home equity loan. Those loans take a backseat to the primary mortgage when it comes to debt collection.

Down Payment Size

If you’re buying a new home, the size of your down payment is also a major determinant of your interest rate.

The Canadian government has introduced minimum down payments dependent on your home’s purchase price. They are as follows.

Purchase PriceMinimum Down Payment
$500,000 or less5%
$500,000 to $99,9995% on the first $500,000

10% for the amount above $500,000

$1 million or more20%

A larger down payment will not necessarily result in a lower interest rate, however. This is because higher down payments may not require mortgage insurance.

In other words, the lender will need to take on more risk even though you’re borrowing a lower percentage. If you end up defaulting, they won’t be reimbursed by an insurer.

When it comes to securing the lowest mortgage rates in Ontario, it generally makes sense to be what’s known as a “high-ratio borrower.” You’ll end up borrowing more money but at a lower rate.

There are some exceptions, of course, which we’ll explore in an upcoming section.

Intended Property Use

If you’re buying a primary residence for yourself, you’ll typically find the lowest mortgage rates in Ontario relative to purchasing an investment property.

This is, again, because investment properties typically come with a higher risk for the mortgage lender. This is particularly true if investment properties produce a substantial portion of your income. In such a case, a real estate meltdown may impact your ability to make payments.

Your Credit Score

A high credit rating demonstrates fiscal trustworthiness. By now it should be no surprise that this comes down to risk on the part of the lender.

If you have a poor credit rating because of past loan defaults, high credit utilization, and other negative marks, your lender will charge a higher interest rate to compensate for taking on increased risk.

If your credit score is below a certain threshold, you may unfortunately not be approved for a mortgage at all.

Amortization Period

A mortgage’s amortization period is simply the term in which you’ll be paying it. A longer amortization period typically comes with higher interest rates. This is particularly true with periods longer than 25 years, which do not qualify for mortgage insurance.

Own Your Home? Trust Alpine Credits for Your Borrowing Needs!

At Alpine Credits, we offer very competitive home equity loans for a variety of needs. Check out this page to learn more about how our loans have been helping Ontarians for 50 years!

Frequently Asked Questions

Mortgage rates are typically calculated based on the federal prime rate, plus or minus a certain percentage. That percentage compensates the lender for risks they may take on in lending to you.

Your mortgage rate represents the percentage of borrowed money you will repay each year. This rate is calculated on an individual basis, which is why the quote you receive may be different than what a lender advertised online, which is typically a quote for borrowers with stellar credit.

There’s no clear way to predict when mortgage rates will rise. The Bank of Canada adjusts its prime rate based on economic conditions, which are fluid. The government’s reason for adjusting rates is quite complicated but can generally be described as an attempt to ensure economic health regardless of the times.

The internet is a very valuable resource when you’re shopping for the best mortgage rates in Ontario. Look at online lenders like Alpine Credits to find better rates and higher chances of approval than you would typically enjoy at a bank.

As of writing, mortgage rates are so low in Canada due to the economic impacts of COVID-19. Specifically, COVID-19 has prompted economic policy that, in turn, led to lower interest rates.

4 Biggest Housing Markets in Ontario

Ontario is Canada’s most populated province by far, with more than 14,745,000 residents as of 2020. It should come as no surprise, then, that the province is also home to some of Canada’s most competitive housing markets.

Here are the province’s top four housing markets in 2020, according to Purple Bricks.

Hamilton

Hamilton lies within Ontario’s Greater Golden Horseshoe, a culturally diverse and economically productive region. According to Zolo, housing prices in Hamilton are up 22.7% despite all of 2020’s challenges.

Ottawa

Ottawa, the capital of Canada, has also seen its housing prices grow by double digits this year – 26.8%, to be exact.

Ottawa is still quite affordable, especially for a major east-coast metropolitan area. There average house there will cost you $539,000 whereas average prices in Toronto have passed the $1 million mark.

Windsor

Windsor is Canada’s southernmost city, lying just a short drive away from Detroit in the United States. House prices in Windsor have grown 15.6% this year and the average property goes for a very affordable $258,000.

Guelph

Guelph, nicknamed The Royal City, is in southwestern Ontario just a short distance from Toronto. Real estate prices there have risen by 16% this year, with the average property fetching $641,000.

Map of Ontario