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As an existing mortgage broker or an aspiring one, learning about historical mortgage rates can help you provide top-notch service to your clients. When you know how rates have changed over time, you can give your clients context and set realistic expectations.
In this article, Wealth Professional Canada will cover how mortgage rates have evolved in the country. We’ll talk about the factors that influence them, and how you can use this knowledge to support your clients.
Historical mortgage rates refer to the interest rates charged on home loans in the past. These rates were recorded over months, years, or decades. Tracking these figures helps you see patterns, spot trends, and explain why rates are higher or lower at certain times.
For example, if your clients ask why rates seem high today, you can show them how current rates compare to those in previous years. This context can help reduce anxiety and build trust. Watch this short clip for more:
Having a good grasp of historical mortgage rates can be beneficial when helping your clients get a mortgage.
Mortgage rates affect how much your clients pay for their homes. Even a small change in rates can mean thousands of dollars in extra payments over the life of a mortgage. When you discuss historical rates, you help your clients:
For example, if rates are near historic lows, your clients might feel more confident about locking in a rate. If rates are rising, they might want to act quickly before rates climb further.
Mortgage rates in Canada are influenced by several factors. The most important include:
The Bank of Canada sets a target for the overnight lending rate. This is the rate at which major banks lend money to each other. When the Bank of Canada raises or lowers this rate, it affects the cost of borrowing throughout the economy.
Variable mortgage rates usually move up or down in response to changes in the policy rate.
Fixed mortgage rates are closely tied to the yields on Government of Canada bonds, especially the five-year bond. When bond yields rise, fixed mortgage rates usually go up as well. When bond yields fall, fixed rates tend to drop.
When the economy is strong and inflation is rising, interest rates usually increase. The Bank of Canada might raise rates to keep inflation in check. During periods of slow growth or recession, rates often fall to encourage borrowing and spending.
Banks and other mortgage lenders compete for business. If one lender cuts rates, others might follow to stay competitive. This can lead to short-term fluctuations in mortgage rates, even if broader economic factors remain unchanged.
Mortgage rates in Canada have changed dramatically over the past several decades. Here’s a look at some of the most important periods:
In the early 1980s, Canada experienced some of the highest mortgage rates on record. Rates for five-year fixed mortgages peaked at over 20 percent in 1981. High inflation and aggressive moves by the Bank of Canada to control it drove rates to these levels. Many homeowners struggled with affordability, and the housing market slowed.
After the peak in the early 1980s, mortgage rates began to fall. By the mid-1990s, five-year fixed rates were closer to eight to 10 percent. Inflation was under control, and the economy stabilized. Lower rates made homeownership more affordable for many Canadians.
The early 2000s saw relatively stable mortgage rates. Five-year fixed rates hovered between five percent and seven percent. The Bank of Canada kept inflation in check, and the housing market grew steadily. Variable rates also became more popular as they offered lower initial payments.
The global financial crisis in 2008 led to a sharp drop in interest rates. The Bank of Canada slashed its policy rate to support the economy. Five-year fixed mortgage rates fell below five percent for the first time in decades. Some variable rates dropped below two percent. This period marked the beginning of a long era of low rates.
Throughout the 2010s, mortgage rates remained at historic lows. The Bank of Canada kept its policy rate low to support economic recovery. Five-year fixed rates often ranged from 2.5 percent to 3.5 percent. This made homeownership more accessible but also contributed to rising home prices in many markets.
The COVID-19 pandemic triggered another round of rate cuts. The Bank of Canada lowered its policy rate to 0.25 percent, the lowest in history. Five-year fixed rates dropped below two percent at some lenders. This fueled a surge in home buying and refinancing as Canadians rushed to lock in low rates.
Starting in 2022, inflation surged due to:
The Bank of Canada responded by raising its policy rate several times. By 2025, five-year fixed mortgage rates had climbed back to five to six percent at many lenders. This shift cooled housing demand and made affordability a bigger concern for home buyers.
Here's a comparative table of the average mortgage rates per decade in Canada:
The highest mortgage rate ever in Canada was 21.75 percent for a five-year term. This happened between August and October of 1981, as the average posted rate from most major mortgage providers.
As for the lowest fixed mortgage rate ever in Canada, it was 2.79 percent for a one-year term, which happened in January 2021. Near the end of that year, the five-year variable mortgage rate had dropped to as low as 0.88 percent.
You might also want to check out our guide to the mortgage market.
Recently, Bank of Canada has been cutting interest rates to boost the housing market. Still, many potential homebuyers were expected to remain on the sidelines if they foresee further economic instability.
It is difficult to predict with certainty when mortgage rates will drop again, as they are influenced by a variety of factors. If you have clients who want to purchase property as soon as possible, it would be wise to start looking at the economic factors involved. That way, you can help them plan better for their finances.
You can use historical mortgage rates in several practical ways:
When you know how rates have changed over time, you can put today’s rates in context and explain the factors that influence them. In turn, you’ll be able to help your clients make better choices about their mortgages.
Finally, always use reliable sources to stay updated and share clear data with your clients. You must also discuss how rate trends might affect their plans. By doing so, you position yourself as a trusted advisor who can guide your clients through changing market conditions.
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