Mortgage & Wealth Strategies

Why Now Could Be the Sweet Spot for 5-Year Fixed Mortgages

June 23, 2025 | Posted by: Matt Broom-Hall

Now’s the Time to Pay Attention to Fixed vs. Variable

As we head into the last stretch of June, all eyes are on tomorrow’s inflation data—and for good reason. It could be the tipping point for mortgage rates in Canada, especially as forecasts begin to feel the pressure of global uncertainty. Between shifting bond yields, a cooling real estate market in some pockets, and the Bank of Canada’s projected cuts still hanging in the air, mortgage shoppers are left wondering: stick or switch? Lock in or float?

Let’s unpack what’s happening—and what it means for your next move.

Right now, fixed rates are holding close to their long-term averages. That sounds boring, but it’s actually big news. For much of the past year, five-year fixed mortgages carried a premium—it was the price you paid for peace of mind. But recently, we’ve seen a convergence: three- and five-year fixed rates are now nearly identical. In plain English? You can get long-term stability without the usual cost trade-off. That’s why many are eyeing the five-year fixed as great value in this environment, particularly if the rate curve between shorter and longer terms stays flat.

However, variables still deserve a seat at the table. Even though Canadians with variable-rate mortgages have felt the sting of high rates over the past two years, there's a growing argument that over the next five years, variable costs may edge out ahead. Market watchers are still anticipating two 0.25% cuts from the Bank of Canada before year-end. But there’s a catch: core inflation just won’t quit, and that’s making the Bank nervous. Tomorrow’s data release will give us a fresh read—and likely shape rate decisions for the rest of the summer.

On the fixed side, bond yields usually guide the trend. Last week, yields nudged slightly lower following geopolitical tensions overseas. In past years, a military conflict would have triggered a run to safety in bond markets, pulling rates down fast. But this time, the bond market barely blinked. It’s a sign that investors believe inflation is sticky enough to limit how far—and how fast—rates can fall, regardless of global unrest.

All of this leaves us in a bit of a holding pattern: mortgage rates aren’t climbing anymore, but they’re also not plunging. And for many borrowers, that creates a narrow but golden window to lock into something stable before more volatility returns.

The Bottom Line
• If you're a buyer: Now could be the sweet spot to lock in a five-year fixed rate before rate spreads widen again. If variable is still tempting you, make sure your cashflow has enough buffer for a bumpy ride—especially with inflation still surprising to the upside.

• If you're a homeowner with a renewal coming up: Run the numbers on both options. While variables may eventually dip lower, the current fixed rates offer stability at competitive levels. That peace of mind might be worth more over five years than chasing savings on rate cuts that may come slower than expected.

• If you're thinking refinance: Don’t just focus on rate. Now’s a great time to revisit your penalty exposure, prepayment privileges, and future flexibility—especially if you’re planning another move or upgrade within the next few years. This is a great time to consolidate high interest debts in to your mortgage.

Tip of the Week
When comparing fixed vs variable, don’t just ask, “Will I save money?” Ask, “How will I sleep at night?” Peace of mind is part of your mortgage strategy too.

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