Mortgage Rates in Ontario

If you are planning to buy a house, you probably hear the word “mortgage rate”. Your mortgage rate has a big impact on how much you will pay for the house.  As you understand the mortgage rate and how much you are getting, then you can have a good knowledge to compare your loan offers and get the best deal.

What is the Mortgage Rate?

When it comes to buying a house, it is a matter of a good amount of money. Sometimes, spending your own money to buy a home is not a wise move. When you lend money to buy a home, you have to pay some interest. The Mortgage rate is the interest rate that you need to pay for your home loan.

A mortgage rate is basically the cost of borrowing money. How much you will pay in mortgage interest depends on several factors like the loan type, amount of money, duration of your loan, and also the size of your down payment. The lower your mortgage rate is, the less money you will have to pay in interest. 

For example, If a lender offers you a 5% fixed mortgage rate on a $500,000 loan. This means you will have to pay 5% interest on your loan balance every year until you pay the loan amount fully.

Difference Between Mortgage Interest Rate and Annual Percentage Rate (APR)

A mortgage rate is the amount of money that you need to pay to your lender to borrow money. The mortgage interest rate does not include any other charges. 

On the other hand, an Annual Percentage Rate or APR includes interest rate and other costs that include borrowing money from the lender. Some of the other costs like broker fees, closing costs, and origination fees are included in the Annual Percentage Rate. 

When you compare different loans annual percentage rates, it is important to know what is included in your annual percentage rate, to know how the amount of your loan will affect.

Different Types of Mortgage Rates

Mortgage rates can be differentiated in terms of the time length it will take to pay off your loan and the type of monthly mortgage interest rate. There are three types of mortgage loans. They are: 

• Fixed Rate: A fixed mortgage rate is an interest rate that stays the same for a fixed number of years and is decided between lender and borrower.

Making it easier, a fixed interest rate will remain fixed, no matter what happens to the interest rate set by the bank. Your mortgage repayment interest amount will remain the same during a fixed time period. 

Mostly, mortgages with fixed rates have higher rates than adjustable rates. Though you have to pay more interest rates, you will be locked in the financial security that comes with a fixed rate. Because your rate is protected if interest rates rise in the market, you do not have to worry.

• Variable Rate: A variable mortgage rate, also called a standard variable mortgage rate or adjustable mortgage rate, comes with an interest rate that can be changed. That means your mortgage repayment amount can go up or down. 

The structure of a variable mortgage rate includes a fixed rate for an initial period and after the initial period is over, the interest rate may change during the loan period. 

You may find lower interest rates after the introductory period. But If the interest rate rises, your payment will also increase. Which can put an extra load to your monthly budget. 

• Tracker Rate: As with variable mortgage rates, a tracker mortgage rate can also change over time. In this type, your repayment amount can go up or down. The difference is in a tracked mortgage rate, the interest rate is set at a fixed level. 

For example, if the base interest rate is set at 5% you might have a tracker rate set at 20% as above the base rate. So, if the rate increases, you have to pay 25% interest on your mortgage.

The Best Mortgage Rate in Ontario

Evaluating all of Ontario’s best mortgage rates together you can choose the best one for you. This information will let you compare the pricing:

For Fixed Rate:

If the loan amount is $400,000 and the down payment is $20,000 

For 5 years:

• Canadian Lender: The Canadian Lender is offering a mortgage rate of 5.64% which will be $2,445 monthly.

• Big 6 Bank: The Big 6 Bank is offering a mortgage rate of 5.69% which will be $2,456 monthly.

• Canwise: Canwise is offering a mortgage rate of 5.79% which will be $2,479 monthly.

• Meridian Credit Union: Meridian Credit Union is offering a mortgage rate of 5.84% which will be $2,491 monthly.
• Alterna Savings: Alterna Savings is offering a mortgage rate of 5.84% which will be $2,491 monthly.
• TD Bank: TD Bank is offering a mortgage rate of 5.84% which will be $2,491 monthly.

For 4 years:

• Big 6 Bank: The Big 6 Bank is offering a mortgage rate of 5.99% which will be $2,526 monthly.

• Canadian Lender: The Canadian Lender is offering a mortgage rate of 6.04% which will be $2,538 monthly.

• Desjardins: The Desjardins is offering a mortgage rate of 6.19% which will be $2,573 monthly.

• ICICI Bank Canada: ICICI Bank Canada is offering a mortgage rate of 6.19% which will be $2,573 monthly.
• Bank of Montreal: The Bank of Montreal is offering a mortgage rate of 6.33% which will be $2,607 monthly.
• MCAP: The MCAP is offering a mortgage rate of 6.39% which will be $2,621 monthly.

For 3 years:

• Big 6 Bank: The Big 6 Bank is offering a mortgage rate of 6.04% which will be $2,538 monthly.

• Canwise: Canwise is offering a mortgage rate of 6.09% which will be $2,550 monthly.

• Canadian Lender: The Canadian Lender is offering a mortgage rate of 6.09% which will be $2,550 monthly.

• Alterna Savings: Alterna Savings is offering a mortgage rate of 6.34% which will be $2,609 monthly.
• ICICI Bank Canada: ICICI Bank Canada is offering a mortgage rate of 6.39% which will be $2,621 monthly.
• Desjardins: The MCAP is offering a mortgage rate of 6.49% which will be $2,645 monthly.

For Variable Rate:

If the loan amount is $400,000 and the down payment is $20,000  

For 5 years

• Canadian Lender: The Canadian Lender is offering a mortgage rate of 5.95% which will be $2,517 monthly.
• Canwise: Canwise is offering a mortgage rate of 6.10% which will be $2,552 monthly.
• CMLS Financial: CMLS Financial is offering a mortgage rate of 6.25% which will be $2,588 monthly.

• First National: The First National is offering a mortgage rate of 6.30% which will be $2,599 monthly.

• • Equitable Bank: Alterna Savings is offering a mortgage rate of 6.30% which will be $2,599 monthly.
• ICICI Bank Canada: ICICI Bank Canada is offering a mortgage rate of 6.30% which will be $2,599 monthly.

For 3 years

• ICICI Bank Canada: ICICI Bank Canada is offering a mortgage rate of 6.85% which will be $2,732 monthly.

• Canadian Lender: The Canadian Lender is offering a mortgage rate of 6.90% which will be $2,744 monthly.

• Scotiabank: The Scotiabank Lender is offering a mortgage rate of 7.95% which will be $3,004 monthly.
• CIBC: The CIBC Savings is offering a mortgage rate of 7.20% which will be $2,817 monthly.

This data is as of Oct 17, 2023. You compare the rates and the offering to decide the suitable one for you.  

What Determines Mortgage Rates

Mortgage interest rates are usually determined by considering several factors. Both your financial condition and the market condition have an impact on your mortgage rate. Factors that impact mortgage rates are given below:

Market Conditions Affect the Mortgage Rate: The market conditions depend on several factors like economic strength, inflation rates, consumer spending, and more. Stocks and bond markets also play a vital role in determining market conditions. Those factors are not in our hands. Market Conditions include: 

1. Economic Strength: Good economic growth brings more buyers to the market. The rate of mortgage increases as the demand increases. Because more buyers are interested in purchasing, the interest rate goes high.
2. Inflation Rates: Mortgage rates usually increase with the inflation rate. When lenders are less likely to get a return on their investment, they increase the rate. 
3. Employment Rate: With the increasing unemployment rate, the mortgage rates usually fall. On the other hand, when the job market is in good condition, the mortgage rates increase because people have jobs that can bear the mortgage cost. 
4. Condition of Housing Market: When people are less interested in building houses, the mortgage rates drop for low demand. An increase in people’s interest in renting houses can also decrease the demand for mortgages.
5. Stock and Bond Markets: Mortgage rates decrease when the stock market is unstable. When the stock market falls, the economic condition of a country also falls.  

Personal Factors Affect the Mortgage Rate: Some personal factors of yours can also affect mortgage rates. These factors can help you get a good mortgage rate. Those are:

• Credit Score: You will get a lower mortgage rate if you have a good credit score. A good credit history of yours will help you to get a better mortgage score. Many lenders have requirements for a specific credit score for a loan.

• Loan Size and Type: The total time it takes to pay your loan fully can determine your mortgage rate. And also your loan type like fixed or adjustable rate can also affect your mortgage rate amount. 
• Down Payment: The higher the amount of the down payment the less amount of mortgage rate. When you make a good amount of down payment, you are left with a small amount. So you borrow less than the market price of your home. You can have a low mortgage rate if you make a good amount of down payment.  
• Loan-to-Value Ratio (LTV): The total loan amount compared to your home value has an impact on mortgage rates. If you have a higher loan-to-value ratio then you can have a higher interest rate.
• Debt-to-Income Ratio: Your debt-to-income ratio tells your lenders how much is your monthly income and how much debt you have. If you have a high debt ratio, your mortgage rate will be higher. 

When you are planning to purchase a home, the mortgage rate has a direct effect on your monthly mortgage payments. Before finalizing one, see all the offers available in the market. Taking time to learn about mortgage rates. Trying to find the factors that can help you to get a lower rate.