Canada Mortgage Rate History
Borrowers today sit between two extremes. The chartered banks’ posted 5-year fixed rate averaged 18.35% in 1981 and 4.79% in 2021. The Bank of Canada (BoC) has held its policy rate at 2.25% since October 29, 2025, most recently at its September 2, 2026 decision. Canadian mortgage rate history shows how BoC decisions, bond yields, and lender pricing moved rates between those extremes, and what the record can and can’t tell you about your own mortgage.
Posted 5-year rates have cycled from above 18% to below 5% and back above 6%, yet monthly payments tell a different story. The payment on an average-priced Toronto-area home rose from about $730 in 1980 to about $5,584 in 2025 because home prices climbed faster than rates fell.
Our guide covers the posted-rate record from 1975, the forces behind it, and what the numbers mean for your next renewal or purchase. Annual figures run through 2025, and policy-rate figures run through the September 2, 2026 decision.
Key Takeaways
- Posted 5-year rates peaked at 21.75% in August 1981 and bottomed at 4.64% in April 2015.
- Bank of Canada (BoC) decisions move variable rates, while Government of Canada (GoC) bond yields move fixed rates.
- Payments on an average-priced Toronto-area home rose from about $730 in 1980 to about $5,584 in 2025.
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Historical Mortgage Rates in Canada Since 1975
Annual average posted 5-year rates have stayed between 5.65% and 6.73% every year since 2022. The range is above the 2020 and 2021 averages of 4.95% and 4.79% and well below the 1981 average of 18.35%.
From the 1970s to today, mortgage interest rates have trended down despite sharp peaks and troughs. Inflation and the global oil crisis drove rates into the double digits in the early 1980s. Posted rates then fell to a low of 4.64% in 2015, and the policy rate itself sat at 0.25% through 2020 and 2021. Posted 5-year rates have since returned to the 6% range.
Source: bankofcanada.ca
The graph above plots the prime rate from 1935 forward. Prime is the benchmark lenders use to price variable-rate mortgages and other variable-rate lending in Canada, so its peaks and troughs show the pattern of rate cycles across the decades.
The table below lists annual average posted rates for 1, 3 and 5-year terms alongside the prime rate, compiled from BoC data.
Average Posted Mortgage Rates for 1, 3, and 5-Year Terms
What Determines Mortgage Rates in Canada?
Four inputs set Canadian mortgage rates: the BoC’s policy rate, Government of Canada (GoC) bond yields, lenders’ costs and competition, and the type of mortgage.
- The BoC’s policy rate anchors variable-rate pricing. The Bank adjusts its overnight rate target on 8 fixed dates a year, and lenders move their prime rates in response. The BoC interest rate schedule lists every date.
- GoC bond yields anchor fixed-rate pricing. Lenders price a 5-year fixed mortgage off the 5-year bond yield, and that yield can rise or fall while the policy rate stays put.
- Lender costs and competition set the final rate. Two lenders facing the same bond yield can price the same mortgage differently, depending on their funding costs and appetite for risk.
- Mortgage type and insurance status change the price again. Insured, insurable and uninsured mortgages carry different rates, and each term from 1 to 10 years has its own rate.
In 1994, the BoC shifted its emphasis from the Bank Rate to a target for the overnight rate, and since 2001 it has used that target, also called the policy rate, as its key interest rate. Lenders set their own prime rates, so the BoC influences mortgage rates indirectly.
Why Do Historical Mortgage Rates Matter?
Historical mortgage rates matter because they show how far rates can move in one cycle and how long a cycle can last.
Between 1981 and 1993, the annual average posted 5-year rate fell from 18.35% to 8.78%, with a rebound to 13.32% in 1990 along the way. The climb from 2021 to 2023 moved faster: the average rose from 4.79% to 6.68% in 2 years, as the policy rate rose 10 times between March 2022 and July 2023.
Mortgage costs also feed into inflation, and inflation feeds back into policy. Shelter costs carry significant weight in Statistics Canada’s Consumer Price Index, and the BoC sets its policy rate to keep inflation near 2%, the midpoint of its 1% to 3% control range.
History describes how rates behaved under past conditions, and conditions do not repeat exactly. The BoC’s staff estimate puts the neutral policy rate between 2.25% and 3.25%, and the policy rate sat at the bottom of that range as of the September 2, 2026 decision. A neutral-rate estimate isn’t a forecast, so no historical pattern can tell you where rates will be at your renewal.
Two other nesto guides cover adjacent questions. The mortgage rates forecast looks ahead, and a separate guide asks whether high rates are historically the norm.
Posted Rates vs. Discounted Mortgage Rates
Posted rates are the standard rates chartered banks publish, and borrowers who negotiate or work with a mortgage broker typically pay less than posted rates.
The BoC tracks posted rates, so they form the longest continuous record of Canadian mortgage pricing. Discounted rates have no official history, since lenders change them constantly. The gap can be wide: the posted 5-year rate averaged 4.79% in 2021, while nesto advertised an insured 5-year fixed rate of 1.34% and an insured 5-year variable rate of 0.99% that year.
| Rate Type | What It Shows | Best Use |
|---|---|---|
| Posted rate | The standard rate the chartered banks publish, as tracked by the BoC | Comparing rates across decades |
| Discounted rate | The lower rate a lender or broker offers after negotiation or promotion | Estimating what borrowers can actually obtain |
| Insured rate | Pricing for mortgages with less than 20% down, backed by default insurance | Buyers with smaller down payments |
| Insurable rate | Pricing for mortgages with 20% or more down that still meet the default insurers’ eligibility rules | Buyers with larger down payments who qualify |
| Uninsured rate | Pricing for mortgages with no default insurance | Conventional purchases and refinances |
Today, nesto’s lowest 5-year fixed insured rate is 4.54%, and its lowest 5-year variable insured rate is 3.41%. Compare current pricing on nesto’s mortgage rates page, where insured, insurable, and uninsured rates are listed separately.
Historical 5-Year Fixed Mortgage Rates in Canada
The chartered banks’ posted 5-year fixed rate peaked at 21.75% in August 1981 and fell to 4.64% in April 2015, its lowest level since the BoC series began in 1975.
In 2020 and 2021, the policy rate sat at 0.25%, yet posted 5-year rates averaged 4.95% and 4.79%. Posted rates stayed high while discounted rates fell, so the posted series understates how cheap borrowing became in those years.
Chart methodology: each point is the calendar-year average of the weekly posted 5-year conventional mortgage rate offered by chartered banks, from Bank of Canada series V80691335, 1975 to 2025. Posted rates are the standard rates banks publish, not the discounted rates borrowers negotiate, and annual averages smooth the weekly highs and lows. Nesto compiled the figures and rounded them to two decimals.
The 5-year fixed rate works as an economic indicator because the 5-year bond yield steers its pricing, and bond markets react to inflation and growth expectations. Borrowers who expect lower rates at renewal sometimes choose a shorter fixed term.
Historical 3-Year Fixed Mortgage Rates in Canada
Posted 3-year fixed rates have usually sat below 5-year rates, but the gap narrowed to 0.07 percentage points in 2023, reversed in 2024, and disappeared in 2025.
Chart methodology: each point is the calendar-year average of weekly Bank of Canada observations, 1980 to 2025, for the prime lending rate (series V80691311) and the posted 3-year conventional mortgage rate offered by chartered banks (series V80691334). Each institution sets its own prime rate, so the series reflects the banks’ reported rates. Nesto compiled the figures and rounded them to two decimals.
The chart above shows how the 3-year fixed rate has moved with the prime rate over the years. In 2024, the annual average posted 3-year rate was 6.85% against 6.73% for the 5-year rate, an inversion: the shorter term cost more than the longer term.
A 3-year term suits borrowers who expect to move or renegotiate within 3 years. Borrowers who want payment certainty for longer should compare the 5-year term; nesto’s fixed mortgage rates page shows current pricing for both terms.
Variable Mortgage Rates and the Prime Rate in Canada
Variable mortgage rates follow each lender’s prime rate, and prime rates follow the BoC’s policy rate.
The prime rate sat at 2.45% from March 2020 to March 2022. Prime then rose with 10 policy-rate increases to a peak of 7.2% in July 2023, and stayed there until June 2024. The full record is on nesto’s prime rate history page.
In 2023 and 2024, the annual average prime rate (6.94% and 6.77%) exceeded the posted 5-year fixed rate (6.68% and 6.73%). In 2021, prime averaged 2.34 percentage points below the posted 5-year rate.
A variable-rate mortgage (VRM) keeps the payment fixed when prime changes, so the split between interest and principal shifts instead. An adjustable-rate mortgage (ARM) changes the payment itself whenever prime moves. Current variable pricing appears on nesto’s variable mortgage rates page.
How Mortgage Payments Have Changed Over Time
The monthly payment on an average-priced Toronto-area home with 20% down rose from about $730 in 1980 to about $5,584 in 2025, or from about $2,609 to $5,584 in 2025 dollars.
Payments climb when rates rise and when prices rise. In 1990, a posted rate of 13.32% pushed the average payment to $2,296. By 2015, a 4.67% rate on a price 2.4 times higher still produced $2,808.
| Year | Average Home Price (Toronto) | Average Home Price in 2025 Dollars (Toronto) | Average Posted 5-Year Rate | Calculated Monthly Mortgage Payment | Monthly Payment in 2025 Dollars |
|---|---|---|---|---|---|
| 1980 | $75,694 | $270,336 | 14.45% | $730 | $2,609 |
| 1985 | $109,094 | $280,793 | 12.17% | $911 | $2,345 |
| 1990 | $255,020 | $526,637 | 13.32% | $2,296 | $4,740 |
| 1995 | $200,220 | $376,268 | 9.2% | $1,347 | $2,532 |
| 2000 | $244,625 | $417,406 | 8.34% | $1,536 | $2,621 |
| 2005 | $337,747 | $517,921 | 5.98% | $1,726 | $2,646 |
| 2010 | $433,431 | $608,648 | 5.57% | $2,131 | $2,992 |
| 2015 | $623,529 | $813,299 | 4.67% | $2,808 | $3,663 |
| 2020 | $926,340 | $1,112,417 | 4.95% | $4,289 | $5,151 |
| 2025 | $1,067,968 | $1,067,968 | 6.23% | $5,584 | $5,584 |
In 1980, the average payment on an average-priced Toronto-area home was about $730, or about $2,609 in 2025 dollars. The average home price that year equals about $270,336 in 2025 dollars, roughly a quarter of the $1,067,968 average price in 2025.
Payments Across Canada
Across Canada, the benchmark home price rose from $243,608 in 2005 to $682,908 in 2025, and the monthly payment rose from $1,245 to $3,570, or from about $1,909 to $3,570 in 2025 dollars. Benchmark prices run below Toronto averages because the national composite includes lower-priced markets.
| Year | Canada Benchmark Home Price | Benchmark Price in 2025 Dollars | Average Posted 5-Year Rate | Monthly Mortgage Payment | Monthly Payment in 2025 Dollars |
|---|---|---|---|---|---|
| 2005 | $243,608 | $373,562 | 5.98% | $1,245 | $1,909 |
| 2010 | $325,150 | $456,594 | 5.57% | $1,598 | $2,245 |
| 2015 | $417,375 | $544,402 | 4.67% | $1,880 | $2,452 |
| 2020 | $557,050 | $668,947 | 4.95% | $2,579 | $3,097 |
| 2025 | $682,908 | $682,908 | 6.23% | $3,570 | $3,570 |
Monthly Payment per $100,000 Borrowed
Each $100,000 borrowed costs $1,492 a month at the 1981 average posted rate and $654 a month at the 2025 average, on a 25-year amortization. Multiply the figure by your mortgage amount in $100,000 units to estimate your payment, or use nesto’s mortgage payment calculator for exact numbers.
| Year | Average Posted 5-Year Rate | Monthly Payment per $100,000 |
|---|---|---|
| 1981 | 18.35% | $1,492 |
| 1990 | 13.32% | $1,125 |
| 2000 | 8.34% | $785 |
| 2010 | 5.57% | $614 |
| 2015 | 4.67% | $563 |
| 2021 | 4.79% | $570 |
| 2023 | 6.68% | $681 |
| 2025 | 6.23% | $654 |
Monthly Mortgage Payments vs. Monthly Household Income
On these averages, the monthly payment on an average-priced Toronto-area home equalled about 41% of median after-tax income in 1980 and about 72% in 2020.
The payment took about 41% of median after-tax income in 1980, about 80% in 1990 when the posted rate was 13.32%, and about 72% in 2020 as prices climbed. The ratios compare an average-priced home to median income, so they overstate the burden for buyers who use larger down payments, two incomes or a lower-priced home.
| Year | Calculated Monthly Mortgage Payment | Median After-Tax Monthly Income | Monthly Payment to Disposable Income Ratio |
|---|---|---|---|
| 1980 | $730 | $1,786 | 40.9% |
| 1985 | $911 | $2,336 | 39% |
| 1990 | $2,296 | $2,863 | 80.2% |
| 1995 | $1,347 | $2,937 | 45.9% |
| 2000 | $1,536 | $3,789 | 40.5% |
| 2005 | $1,726 | $4,293 | 40.2% |
| 2010 | $2,131 | $4,561 | 46.7% |
| 2015 | $2,808 | $4,826 | 58.2% |
| 2020 | $4,289 | $5,936 | 72.3% |
A Timeline of Canadian Mortgage Rate Trends
Canadian mortgage rates have moved through seven phases since the Second World War: post-war baby-boom demand, the 1970s and 1980s inflation shock, the 1990s recession, the 2008 financial crisis, the 2010s oil shock, the pandemic and inflation shock, and today’s hold.
Post-WWII Era: Baby Boomer Housing Demand
Canada’s economy emerged from the Second World War stronger than it entered it. Employment was high, and housing demand was strong as the baby boom began. The BoC’s Bank Rate sat at 1.5% from 1945 to 1950 before rising to 2% in 1951.
The 1970s and 1980s: Inflation and Stabilisation
The 1973 oil embargo and a decade of high inflation pushed the prime rate above 10% in 1974. The prime rate reached 22.75% in August 1981, the highest level in the BoC’s series, and the Bank Rate peaked at 21.03% that month. The posted 5-year fixed rate hit 21.75% that month and averaged 18.35% across 1981.
The 1990s: Recession and Recovery
A recession in the early 1990s followed the late-1980s high-rate years. The posted 5-year rates fell from an annual average of 13.32% in 1990 to 8.78% in 1993. The federal government and the BoC adopted inflation-control targets in 1991, and in 1994 the Bank began shifting its emphasis to an overnight-rate target.
The 2000s: The Global Financial Crisis and Its Aftermath
The 2008 financial crisis pushed the policy rate down to 0.25% by April 2009, where it stayed until June 2010. Posted 5-year rates averaged 5.57% in 2010, down from 5.98% in 2005.
The 2010s: Oil Price Shock and Slow Normalisation
The policy rate rose from 0.25% to 1% in 2010, then fell to 0.5% in July 2015 after the oil price collapse. The posted 5-year rates averaged 4.67% in 2015. Rate increases between July 2017 and October 2018 lifted the policy rate to 1.75%, where it stayed until March 2020.
2020 to 2024: The Pandemic and the Inflation Shock
In March 2020, the BoC cut its policy rate three times to 0.25% and held it there until March 2022. Statistics Canada reported inflation of 5.1% in January 2022 and 8.1% in June 2022. The Bank raised its policy rate 10 times between March 2022 and July 2023, from 0.25% to 5%, and posted 5-year rates averaged 6.68% in 2023. The first cut of the next cycle came in June 2024.
2024 to Present: Rate Cuts and a Hold
Seven cuts between June 2024 and March 2025 took the policy rate from 5% to 2.75%. The Bank held at 2.75% in April, June and July 2025, then cut to 2.5% on September 17 and to 2.25% on October 29, 2025. The Bank has held at 2.25% for 7 consecutive decisions, most recently on September 2, 2026.
In its September 2 statement, the BoC said headline inflation had run near 3% on higher gasoline prices. Excluding gasoline, inflation was 2.2%, and upside risks to the Bank’s inflation forecast had increased. The next announcement is October 28, 2026, alongside a Monetary Policy Report.
How to Use Mortgage Rate History When You Choose a Mortgage
Mortgage rate history helps most as a risk measure: it shows how much payment change borrowers have absorbed before and points to the term that fits your plans.
If your mortgage renews within the next 12 months, compare payments at several rates. A $500,000 balance with 25 years remaining costs about $2,849 a month at the 2021 average posted rate of 4.79%. At the 2025 average of 6.23%, the payment is about $3,268, an increase of about $419 a month. Both figures assume a fixed rate compounded semi-annually. Your own rate will differ, so run your numbers through nesto’s mortgage renewal calculator.
If you’re buying, test your budget at the current rate and then at 2 percentage points higher. The posted 5-year rate rose 1.89 percentage points from 2021 to 2023, so a 2-point cushion covers a move of that size.
If you hold a variable-rate or adjustable-rate mortgage, each BoC decision reaches your rate, and the Bank’s next announcement is October 28, 2026. If you hold a fixed-rate mortgage, bond yields matter only when your term ends. A variable rate suits borrowers who can absorb payment changes, while those who need a fixed payment for the full term should read Nesto’s fixed vs variable guide.
Rate history isn’t a reason to wait for a lower rate. History can’t tell you whether rates will be lower on your renewal date. Nesto offers rate holds of up to 150 days once you apply, so you can lock in a rate before your closing or renewal date.
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Frequently Asked Questions (FAQ) About the Canadian Mortgage Rate History
What was the highest mortgage rate in Canadian history?
The highest mortgage rates in Canadian history came in August 1981, when the posted 5-year fixed rate reached 21.75%, the prime rate reached 22.75%, and the Bank Rate reached 21.03%. Posted 5-year rates averaged 18.35% across 1981, during the early 1980s inflation and the global oil crisis.
What was the lowest mortgage rate in Canada?
The lowest advertised mortgage rates in Canada came during the pandemic, when nesto advertised a 0.99% insured 5-year variable rate and a 1.34% insured 5-year fixed rate in 2021. Both were nesto’s lowest advertised rates, so other lenders may have offered different rates, and availability depended on insurance status and qualification. The lowest posted-rate level in the BoC series is 4.64%, reached in April 2015.
Are mortgage rates lower today than in the 1980s?
Mortgage rates are much lower today than in the 1980s but higher than during the pandemic. Posted 5-year rates averaged 18.35% in 1981 and 6.23% in 2025, and the BoC’s policy rate was 2.25% as of its September 2, 2026 decision, against 0.25% through 2020 and 2021.
How high can mortgage rates go in the future?
No one can say how high mortgage rates will go, and history gives ranges, not limits. The BoC’s staff estimate the neutral policy rate at 2.25% to 3.25%, and the policy rate was 2.25% as of September 2, 2026. Fixed mortgage rates also depend on bond yields, so they can move even when the Bank holds its policy rate.
What is the difference between posted and discounted mortgage rates?
Posted mortgage rates are the standard rates the chartered banks publish, and discounted mortgage rates are the lower rates lenders and brokers offer after negotiation or promotion. The BoC tracks posted rates, so they form the long-run historical record, and borrowers who shop around typically pay less than posted.
How do the Bank of Canada and bond yields affect mortgage rates?
The BoC’s policy rate drives variable mortgage rates through lenders’ prime rates, and GoC bond yields drive fixed mortgage rates. A BoC rate hold leaves prime and variable rates unchanged, while fixed rates can still rise or fall with daily fluctuations in the 5-year bond yield.
Final Thoughts
Canadian mortgage rates have moved from above 18% to below 5% and back above 6%, and monthly payments have risen alongside home prices and rates. Posted rates give the long-run record; discounted rates show what borrowers can negotiate.
If you’re refinancing, renewing or buying, speak with nesto mortgage experts. Our licensed mortgage professionals can help you compare rates, review your mortgage strategy and find the most suitable options for your unique needs.
Why Choose nesto
At nesto, our commission-free mortgage experts are salaried and regulated, with most licensed in multiple provinces. They are evaluated on client satisfaction and the quality of their advice, and they help you compare mortgage options and understand rates and qualification requirements. Once you’re ready to move forward, they work with you on a mortgage strategy that fits your situation.
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