Is Canada’s Mortgage War Over?

Record-low fixed mortgage rates can’t last forever, and today’s big banks are living proof.

In November 2008, the monthly average rate for a conventional five-year mortgage in Canada was seven percent. Since the 2008 market crash, Canadians have become accustomed to artificially low mortgage rates. In fact, it’s almost unprecedented; since 2010, the Bank of Canada has kept its key overnight lending rate at one percent—the longest period of unchanged rates in more than 50 years.

While the Bank of Canada has said it probably won’t raise its overnight lending rate until late in 2014, that doesn’t mean banks are going to sit back and wait. In fact, banks can raise longer-term mortgage rates well ahead of any action the Bank of Canada might make—and they are.

Back in May 2013, Canada’s five big banks were selling five-year fixed mortgages below 2.99%. On June 10, RBC made the first move, raising its rate to 3.29%. One month later, and it’s at 3.69%. Over the last two months, RBC’s rate has jumped almost 25%.

Granted, even though fixed mortgage rates are on the rise, they are still well below 2008 levels. That doesn’t mean first-time home buyers or those looking to refinance their mortgages should take a leisurely approach and wait. Doing so could be a costly mistake.

Today’s fixed interest rates are on the rise not because the Bank of Canada is hinting it will increase interest rates; they’re on the rise because of regular economic factors. When the Bank of Canada does implement a rate hike, most Canadians will be in for quite a shock. With that in mind, it’s an excellent time for those looking to buy a home to lock into a fixed mortgage rate.

At, we think it’s important for first-time home buyers, or those looking to refinance at more favourable terms, to take advantage of today’s still-low interest rate climate.

But you can’t trust Canada’s big banks to look out for your best interests when it comes to getting a first-time mortgage. After all, it’s their goal to sell you one of their lending products, whether it’s in your best interests or not.

That could mean locking into an unfavourable term with high interest rates. And that can translate into additional interest charges in the tens of thousands of dollars.

As of July 15, 2013, the average monthly rate for a five-year fixed mortgage at Canada’s five big banks is 4.22%. CIBC is highest at 5.14%, while BMO is “lowest” at 3.59%. Fortunately, Canada’s biggest banks do not have a monopoly on lending products. Caisse Financial Group’s five-year fixed mortgage rate is 2.99%; that’s 41% less than CIBC and 16% below BMO. It pays to shop around—or at least have a brokerage like do it for you.

Because agents are licensed and independent, they can draw from all lenders who provide mortgage products, saving you time and money.

While Canada’s mortgage wars may be coming to an end, you can trust a agent to help you find one that best suits your lifestyle needs.

Bob Aggarwal

Mr. Aggarwal was one of the original founders of, one of the largest volume Mortgage Brokerage houses in Canada. Mr. Aggarwal has over 12 years of experience in Brokerage and Lending in the small and medium business sector, as well as experience and expertise in the residential housing market. Since the inception of, Mr. Aggarwal has been instrumental in developing the operating platforms, and policies and procedures which have guided the organization to date.


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