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Oct 4, 2023
3 min
Renewing Your Mortgage this Year? Here’s What You Need to Know About the Rates

During the beginning of the pandemic, interest rates were at all-time lows and many Canadian
took advantage of that to lock in low rates. Now, many of those who secured
favourable rates a few years ago are up for mortgage renewal and must brace for a rising rate

In December 2020, the 5-year fixed rate was at 1.39%, but now, due to inflation, the 5-year fixed
rate has soared to 5.49% in September 2023. In an effort to combat rising inflation, the Bank of
Canada has been steadily increasing its overnight lending rate since March 2022, interest rates
have increased ten times since then, however, inflation is still stubbornly high. If inflation doesn’t
drop to the Bank of Canada’s 2% target, there’s a good chance interest rates will continue to

So what do Canadian homeowners need to know to ensure their mortgage renewal goes smoothly and 
serves their best interests? Use these tips from the experts at Zoocasa as a guide to help you
start the mortgage renewal process with confidence and secure a rate that meets your financial goals.

Be Proactive

The best way to prepare yourself for a mortgage renewal is to start the research process as
early as possible. Don’t wait until you receive a mortgage renewal reminder in the mail to start
looking into other options.

First, you should check the date of when your current mortgage ends, known as the maturity
date, to calculate how long you have, however, you can start negotiating and shopping around
for a lower rate 120 days before the maturity date. This will give you enough time to dig into the
specifics and find the best deal for you.

Fixed-rate vs. Variable-rate Mortgages

In Canada, there are two main types of mortgage rates – fixed-rate and variable-rate. Fixed-rate
mortgages have a set interest rate that remains the same throughout the entire term and are
generally considered safer. This means you won’t have to worry about fluctuating interest rates,
but you may end up paying more in the long term if interest rates do drop.

Variable-rate mortgages are less stable and fluctuate based on the Bank of Canada’s overnight
lending rates. This means the amount you pay towards interest can change, and sometimes this
may be in your favour if interest rates go down. You may also be able to switch from a variable
rate to a fixed rate if needed.

3-year vs. 5-year Fixed Mortgages

A longer mortgage term offers stability and may be a good option when it seems that interest
rates will continue to rise. A longer-term mortgage is also a good option if you plan to stay in the
same home for the next five years and want peace of mind.

On the other hand, if you anticipate a move coming up, a 3-year mortgage may be better for
you. Though there is less rate stability with a 3-year mortgage, there is a possibility of lower
rates and there’s more flexibility if you do need to break your mortgage.

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Don’t Be Afraid to Negotiate

The mortgage rate posted by your mortgage lender might not be the lowest possible option. It’s
likely that your current lender can give you a discounted rate if you ask and have good financial
status. Every small bit counts when it comes to mortgages so even if you can reduce the rate by
only a small fraction, it can potentially save you hundreds of dollars a year.

Compare Rates and Offers

Before taking the offer from your current mortgage lender, compare rates from multiple lenders
and other mortgage brokers. You may be able to use this information to negotiate a better offer
with your current lender or you can make a switch to a new lender.

When researching other rates, don’t assume the advertised rate is the best offer out there.
Contact the mortgage lender or bank to find out what rate they can really offer you. You will
likely need to apply for a rate quote by filling out a pre-approval application and providing your
personal information. Doing this can give you a more accurate picture of the rates out there.

Renewing your mortgage is a serious task that requires some preparation and research.
However, by taking the time to plan and understand the different types of rates and comparing
rates, you can save yourself money in the future and secure yourself a favourable mortgage
rate. Have other questions about the home-buying process? Visit for the latest
market insights.

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