The majority of Canadian homeowners continue to favor 5-year fixed-rate mortgage terms. We are the best place online to find everything you should know about 5-year fixed-rate mortgages, as we provide you access to the lowest mortgage rates as well as this guide to help you determine whether a 5-year fixed-rate mortgage is right for you. The following is a comprehensive overview of 5-year fixed mortgages and a listing of the best 5-year fixed rates:
How Does a 5-Year Fixed Mortgage Rate Work?
A 5-year fixed mortgage rate remains the same during the 5-year mortgage term. At the end of 5 years, you must pay off the mortgage in full or refinance into a new loan term.
The loan term is usually different than the amortization period, which is the total length of time you plan to finance your home. For example, a loan may have a 25-year amortization period, which means you are expecting to pay off your home in 25 years. With a 5-year fixed mortgage, the fixed rate that you pay for each 5-year period may differ, effectively meaning that you could pay 5 different 5-year fixed mortgage rates while you are paying off your home.
Pros of a 5-Year Fixed Mortgage Rate
• Stability — You know that your mortgage interest rate is locked in for a set period.
• Time Savings — Since your rate is locked in, you don’t have to worry about taking time in the near future to renegotiate a rate.
• Market Hedge — The 5-year fixed-rate mortgage protects you if you think that rates are going to fluctuate widely in the next 5 years.
Cons of a 5-year Fixed Mortgage Rate
• Cost — Fixed-rate mortgages often have higher rates than variable-rate mortgages.
• Permanence — Average fixed rates might drop during your mortgage term, and it can be costly to renegotiate your loan before the end of the 5-year term to get a lower rate.
Some Interesting Facts About the 5-Year Fixed Mortgage Term
When it comes to mortgage rates, the 5-year fixed mortgage term remains the most popular. Here are some other interesting facts about this term:
• Approximately two-thirds of all Canadians choose a 5-year mortgage term (fixed or variable rate).
• The percentage of Canadians within specific age groups that choose a 5-year mortgage term tends to increase as people get older.
• Over two-thirds of all Canadians have a fixed-rate mortgage of some kind.
• Those who get approval for a 5-year fixed rate term also get approval for loans with shorter terms.
• Out of all mortgage rates in Canada, 5-year fixed mortgage rates receive the most inquiries online as of April 2012.
• The highest average 5-year fixed mortgage rate in history was 21.46 percent in September 1981.
• The lowest 5-year fixed mortgage rate in history was 2.99 percent, which was offered by the Bank of Montreal in January 2012.
• Since 1981, average 5-year fixed mortgage rates have been in steady decline. Although a few upticks have happened since then, the overall trend has been for rates to decrease, with each uptick lower than the one preceding it.
• 5-year mortgage rates are based on the yields of 5-year government bonds in Canada.
Get the Best 5-Year Fixed Mortgage Rates
You should always want to get the lowest rate on a 5-year fixed-rate mortgage. Click on one of the rates on this page to access the best 5-year fixed mortgage for your needs.
