Compare Fixed Mortgage Rates in Ontario for 2025
Fixed mortgage rates have historically been the most popular choice in Canada, and it’s easy to see why. They provide the peace of mind that comes with a stable rate and consistent payments—both principal and interest.
How much do you value peace of mind? While a variable rate might offer potential savings, some borrowers prefer the security of knowing exactly what their payments will be over the long term. With the possibility of variable rates rising, a fixed rate can be a comforting option, even if it costs a little more upfront.
As we approach 2025, with higher rates in the market, what’s the best fixed-rate option to choose? Right now, the 5-year fixed rate is sitting in the high 3% to low 4% range, and this could be the sweet spot for many Ontario homeowners. Let’s take a closer look at the various fixed mortgage terms and weigh their benefits and risks.
Fixed Mortgage Rate Terms: Shorter vs. Longer Terms
1-Year Fixed Mortgage Rates in Ontario
The 1-year fixed rate is for those who want to take things one step at a time. It gives you the opportunity to reassess your situation in a year, with the potential to renew at a lower rate if the market shifts.
Pro: Flexibility if you plan to move or want to switch to a better rate.
Con: Right now, 1-year fixed rates are higher than variable rates, which are currently on the decline.
2-Year Fixed Mortgage Rates in Ontario
The 2-year fixed rate offers a bit more stability than the 1-year option, especially as the economy adjusts to higher interest rates.
Pro: A nice middle ground that provides more rate stability than the 1-year term.
Con: Currently, it’s priced quite similarly to the variable rates, which are also dropping.
3-Year Fixed Mortgage Rates in Ontario
As of January 2025, the 3-year fixed rate is lower than both the 1-year and 2-year fixed rates but still slightly higher than the 5-year fixed rates.
Pro: This term gives you stability for 3 years, and the option to lock in a lower rate if rates fall further.
Con: If inflation returns or if the Bank of Canada hikes rates, your 3-year fixed rate could renew at a higher rate than expected.
4-Year Fixed Mortgage Rates in Ontario
The 4-year fixed rate doesn’t quite offer the best value right now. At the time of writing, 4-year rates are often priced higher than 5-year rates, likely because there’s more demand for 5-year terms.
Pro: You’re locking in a term that’s close to the 5-year rate.
Con: Unless you find a good special deal, it might not be worth paying more for this term.
5-Year Fixed Mortgage Rates in Ontario
The 5-year fixed mortgage has been the most popular choice for years, and it continues to make sense for many borrowers.
Pro: If you’re worried that rates won’t come down quickly or as much in the coming years, this is a solid option for peace of mind and long-term stability.
Con: At the low 4% range, it’s a good deal right now. But if variable rates settle into the high 3% range in 2025, the gap won’t be too big. Still, locking in at a low 4% now could save you more in the long run.
Mortgage Term Recommendation Summary: Which Option is Best for You?
If you're comfortable with a little more risk, a variable mortgage rate might be the way to go. With a generally weaker economy expected in 2025 and no real signs of inflation returning soon, you could enjoy lower rates for a while. Plus, the variable rate lets you lock into a fixed rate at any time and has lower penalties for breaking the mortgage. On the other hand, if you're concerned about inflation making a comeback in the next few years, locking in a 3-year or 5-year fixed rate could be the smartest move. If rates rise again, the stability of a fixed rate will provide peace of mind—and it might even end up being the cheaper option if variable rates climb.
