The 10-year fixed rate is one of Canada’s most stable term lengths against fluctuating rates; it offers homeowners and homebuyers long-term stability and predictable payments. This guide will walk through everything you need to know about 10-year fixed mortgages in the Canadian market. Whether you are searching for your first home, renewing an existing mortgage, or considering refinancing, understanding all your options is key to making the best financial decision.
What are the Current 10-year Fixed Mortgage Rates in Canada?
Here are the current 10-year fixed rates from major banks and alternative lenders in Canada
| Lender | Posted Rate |
|---|---|
| Lowest in Canada | 5.29% |
| First National | 5.89% |
| Tangerine | 6.00% |
| Manulife | 6.69% |
| Simplii Financial | 7.04% |
| CIBC | 7.04% |
| National Bank | 7.14% |
| Laurentian | 7.14% |
| Desjardins | 7.14% |
| Scotiabank | 7.19% |
| BMO | 7.19% |
How Much Can You Save by Comparing 10-Year Fixed Rates?
With over a full percentage point difference between the highest and lowest 10-year fixed rates, shopping around can lead to significant savings. For example, on a $500,000 mortgage amortized over 25 years, the total interest paid over the 10-year term would be:
- 5.29% rate: $154,432
- 7.19% rate: $194,213
Simply choosing the lower rate will save you $39,781 in interest costs over 10 years. Always compare rates from multiple lenders to find the best 10-year fixed mortgage for your budget and needs.
What is a 10-year Fixed Mortgage Rate?
A 10-year fixed mortgage rate stays the same for the entire 10-year term. Your interest rate and monthly payments will not fluctuate even as market rates change. At the end of the term, you can renew at new rates. The longer-term provides rate stability but comes at a slight premium over shorter terms.
How Are 10-Year Fixed Mortgage Rates Determined?
10-year fixed rates generally follow 10-year Government of Canada bond yields. Lenders price fixed rates based on bond yields, representing their capital raising cost, plus a markup to account for profit and risk. The markup compensates lenders for the higher default exposure compared to essentially risk-free government bonds. As 10-year bond yields rise and fall, fixed mortgage rates tend to follow suit.
10-year fixed terms are less common, with roughly 2% of Canadian mortgages over 5 years. Most borrowers opt for 5-year fixed terms to balance rate savings with payment stability. However, 10-year terms offer the ultimate peace of mind for risk-averse borrowers focused on long-term budgeting.
What Factors Influence Changes in 10-Year Fixed Mortgage Rates?
10-year bond yields, and in turn, 10-year fixed mortgage rates, respond to economic events and conditions such as:
- Inflation/CPI: As inflation rises, bond yields typically increase as investors demand higher returns to offset rising prices. This leads to higher fixed mortgage rates.
- Employment Trends: Strong job growth and falling unemployment put upward pressure on interest and fixed mortgage rates as the economy strengthens.
- Bank of Canada Policy: Rising or falling prime rates influenced by Bank of Canada policy affect bond yields and fixed mortgage pricing.
- Investor Sentiment: Pessimism about economic growth can lower bond yields and fixed rates, while optimism can push both rates higher.
Is it Hard to Get a 10-year Fixed Mortgage in Canada?
Getting approved for a 10-year fixed mortgage is not necessarily more complex than other terms. Lenders will assess your application based on the same criteria:
- Income and employment status
- Credit score and history
- Total debt obligations
- Down payment amount
One key factor is that you’ll need to qualify at the 10-year fixed rate offered, which is typically higher than shorter terms. This means you’ll need enough income to cover the larger fixed payments over the 10-year term. Speak to a mortgage broker who can help you find competitive 10-year fixed rates and match you with a lender suited to your financial profile.
Is a 10-Year Fixed Mortgage Better Than Other Terms?
Let’s review the benefits of a 10-year fixed rate as well as its pros
| Pros | Cons |
|---|---|
| – Know the exact mortgage payment for the next 10 years, which helps with budgeting and financial planning. – Don’t have to worry about rate hikes impacting your mortgage over the next decade. This is valuable for risk-averse borrowers. | – Typically higher rates than shorter terms – Less flexibility; locked in for full 10 years – Opportunity cost if rates fall in future |
10-year fixed rates are generally 0.10% to 1% higher than 5-year fixed rates. The exact difference depends on market conditions and lender pricing. The higher rate compensates the lender for carrying a lower rate longer. Shorter terms often have lower rates but carry renewal risk if rates increase.
There is no definitively better mortgage term. The best option depends on your financial situation, needs, and market outlook. Consider factors like:
- Current/expected income: Will it cover payments at today’s rates?
- Outlook on rates: Will they rise or fall in the mid-term?
- Budget priorities: Is payment stability more important than savings?
- Timing: Are you looking to live in the home for the short or long term?
A 10-year fixed term provides unmatched payment stability and insulation from rate hikes, which may be worth the slight premium over shorter terms for the right borrower.
Explore our helpful guide on different mortgage term rates in Canada
- 5-Year Fixed Mortgage Rates
- 5-Year Variable Mortgage Rates
- 3-Year Fixed Mortgage Rates
- 3-Year Variable Mortgage Rates
When Is It a Good Idea to Refinance a 10-Year Fixed Mortgage?
It may make sense to refinance before the 10-year term matures if:
- Rates decline significantly: You may offset penalty costs by lowering your rate.
- Your financial situation changes: Refinancing can allow you to tap home equity or change the payment schedule.
- You want to consolidate debts: Refinancing can roll high-interest debts into your lower mortgage rate.
Always compare the refinancing costs to the potential savings to see if it makes financial sense.
Costs Associated with Breaking a 10-Year Fixed Mortgage
Breaking a 10-year fixed mortgage term before maturity can trigger significant penalties in the early years of the term.
- Before Year 5: The lender may charge an interest rate differential (IRD) penalty based on lost interest due to the lower locked-in rate. This can amount to thousands.
- After Year 5: The maximum penalty the lender can charge is 3 months’ interest under the Interest Act.
There may also be discharge/administration fees of a few hundred dollars. The penalties are meant to compensate the lender for loss of revenue when a mortgage is broken prematurely.
How to Lock In a 10-Year Fixed Rate?
When you find a 10-year fixed rate you want to lock in, ask the lender about a rate hold. Many will hold a rate for 60 to 120 days for a small fee, allowing you time to complete the mortgage process. Discuss rate hold options and duration with your mortgage broker or lender.
Choosing the Right 10-Year Fixed Mortgage for You
Consider your personal situation when choosing a 10-year fixed mortgage:
- Your employment outlook: Do you have job security to cover payments long-term?
- Future plans: Do you intend to live in the home for 5 years?
- Rate outlook: Do you expect interest rates to rise or fall in the coming years?
- Risk tolerance: How comfortable are you with rate fluctuations?
The best 10-year mortgage option will align with your financial situation, needs, and risk appetite.
How to Find the Best 10-Year Fixed Mortgage Rate for Your Needs?
- Compare rates from at least 3-5 different banks/lenders
- Work with a mortgage broker to access rates from across the market
- Look beyond the major banks at alternative/private lenders
- Calculate the total interest costs over the full 10-year term
- Ensure you qualify based on the 10-year fixed rate
- Review all features and fine print like prepayment options
The lowest advertised rate may not always be the best if it has restrictive terms. Finding the optimal 10-year fixed mortgage requires doing your homework and understanding your financial situation.
Key Takeaways on 10-Year Fixed Rates in Canada
Here are 6 points on 10-year fixed rates Canadians need to remember:
- 10-year fixed terms offer stability by locking in your mortgage rate and payments for 10 years
- They come with slightly higher rates than shorter terms but protect against interest rate hikes
- Compare rates from multiple lenders to find the best 10-year fixed mortgage
- Consider your unique financial situation and rate outlook when choosing terms
- Refinancing a 10-year fixed mortgage can be costly in the early years due to prepayment penalties
- Work with a broker or advisor to find the right 10-year fixed mortgage for your needs
While less common than 5-year fixed terms, 10-year fixed rates provide unmatched long-term payment stability and insulation from rising interest rates that may suit some borrowers. Assess your personal financial situation and consult professionals to determine if a 10-year fixed mortgage aligns with your needs and goals.
FAQs on 10-year Fixed Rates
Will my payments change on a 10-year fixed mortgage?
No, your monthly mortgage principal and interest payment remains unchanged for the entire 10-year term on a fixed-rate mortgage.
Are 10-year mortgage rates higher than 5-year rates?
Yes, 10-year fixed rates are typically 0.10-1% higher than 5-year fixed mortgage rates to compensate lenders for the longer term.
Who offers the best 10-year mortgage rates in Canada?
Smaller lenders often have the most competitive 10-year rates. Work with a broker to find the best 10-year fixed mortgage rate for your specific financial situation.
Where can I get a 10-year fixed mortgage with bad credit?
Alternative and private lenders like First National, MCAP may offer 10-year fixed mortgage options for borrowers with less-than-perfect credit.
What documents do I need to apply for a 10-year fixed rate mortgage?
Typical documents include income proof, tax returns, a credit report, a property appraisal, ID, and details on the down payment source.
