Five-Year Fixed Mortgages: Stability and Exit Costs

A five-year fixed mortgage provides rate certainty for the full five-year term. That can simplify planning, but the price of an early move or refinance depends on the contract. Compare both the offered rate and the flexibility you may need before maturity.

Five-year offers need matching conditions

• Purchase or switch, amortization of 25 years or less: RBC’s mortgage page, checked October 22, 2026, advertised a special five-year closed fixed contract rate of 5.140%, with an APR of 5.170%.
• Separate eligible high-ratio purchase offer: a 4.840% contract rate, with an APR of 4.870%, subject to RBC’s eligibility conditions. These are conditional examples from one lender, not a Canadian lowest-rate ranking.

Compare like-for-like offers and account for mortgage insurance, fees and prepayment terms. Our general fixed-rate guide explains the rate categories and includes a reproducible payment example.

Compare certainty with flexibility

A five-year fixed mortgage keeps the rate unchanged until maturity. A variable rate changes with the lender’s prime rate; depending on the product, the payment may adjust or initially stay fixed while principal repayment changes. Do not assume a variable mortgage is always cheaper or that every variable product changes its payment immediately.

Compare the payment, possible changes, prepayment formula and your ability to keep the loan until maturity. The fixed-versus-variable guide covers these mechanics.

Why fixed rates follow Government of Canada bonds

Five-year fixed rates do not move directly with the Bank of Canada’s policy rate. They are closely tied to the yield on Government of Canada bonds of the same term. As the Bank of Canada explains, government bond yields have a big influence on other borrowing rates: when the five-year yield falls, five-year fixed mortgage rates tend to fall as well.

Each lender adds its own spread on top of that yield and decides when and by how much to adjust its rates, so a drop in bond yields does not always show up in posted rates the same day. You can track Canadian bond yields published by the Bank of Canada, then compare written quotes before you commit.

The mortgage stress test

• General qualifying rule: the higher of 5.25% and the contract rate plus 2 percentage points.
• Hypothetical example: a 4.50% contract rate therefore gives a qualifying rate of 6.50%.
• Framework and exceptions: OSFI oversees the uninsured framework at federally regulated lenders; Finance Canada is responsible for the insured framework. Check transaction-specific exceptions, including qualifying uninsured straight switches at renewal.

Is five years appropriate?

A five-year term buys rate stability, not a guarantee of the lowest lifetime cost. Compare the rate with portability, extra-payment privileges and the charge for an early exit. If you may move sooner, compare a three-year term and obtain a written penalty illustration.

The FCAC qualifying-rate explanation and OSFI uninsured framework describe the applicable rules.

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