Looking to buy your first home in Canada this year? You’re not alone. 2025 is shaping up to be a big year for first-time homebuyers, especially in Ontario, where market activity is on the rise. But with interest rates in flux and lenders competing hard, locking in the right mortgage rate can save you thousands of dollars over time.
In this blog, we’ll walk you through what’s happening with mortgage rates in 2025, the difference between fixed and variable options, and how to secure the best possible rate in today’s market.
Mortgage Rate Trends in 2025 – What’s the Current Outlook?
After years of rate hikes, the Bank of Canada started easing its policy in late 2024. By mid-2025, the key interest rate stands at 2.75%, offering some breathing room to homebuyers across Canada.
However, mortgage rates aren’t uniform. What you’ll be offered depends on your lender, location, credit profile, and whether you go with a mortgage broker or a bank. Some lenders pass on rate cuts quicker than others, making it essential to compare offers from multiple sources.
In today’s environment, five-year fixed mortgage rates are averaging between 3.8% and 4.5%. Variable mortgage rates are sometimes slightly higher but may fall if the Bank of Canada cuts rates again later this year.
Fixed vs Variable Mortgage Rates in 2025 – Which One Is Right for You?
Choosing between a fixed and variable mortgage rate can be a key financial decision, especially for first-time buyers.
- Fixed rates offer consistency in monthly payments, protecting you from future rate hikes. In 2025, many Canadians are locking in fixed rates below 4%, which provides both security and predictability.
- Variable rates, on the other hand, may offer a lower cost in the long run, but they come with risk. If interest rates fall further, variable-rate holders could benefit. But if rates rise, your payments could increase as well.
If you want peace of mind and a set budget, a fixed-rate mortgage is a strong choice. But if you’re willing to accept short-term fluctuations in exchange for long-term savings, a variable rate may be worth considering.
Factors That Influence Your Mortgage Rate:
Getting the best mortgage rate in Canada isn’t just about timing the market. Lenders look at several personal and financial factors before determining the rate they’ll offer:
- Credit Score: Most lenders reserve the best rates for applicants with a score above 760. If your score is below 600, you may face significantly higher interest or be denied altogether.
- Down Payment: Putting down 20% or more not only helps you avoid mortgage insurance but can also qualify you for lower rates.
- Employment and Income: Steady income and job security help build lender confidence. Self-employed buyers may need to provide extra documentation.
- Debt-to-Income Ratio: The less debt you carry, the better your borrowing profile appears.
- Property Location: Real estate markets vary between cities. A home in Toronto or Mississauga may affect your rate differently than one in a smaller Ontario town.
- Lender Type: Mortgage brokers often have access to better offers from multiple lenders compared to what you’ll find at a big bank.
Before applying, it’s a good idea to check your credit report, gather your income documents, and speak to a mortgage advisor to understand where you stand.
How to Secure the Best Mortgage Rate in Ontario?
Ontario remains one of Canada’s most competitive housing markets. Whether you’re buying in Toronto, Brampton, Ottawa, or elsewhere, here are steps you can take to find the lowest mortgage rates:
- Compare Rates Online: Platforms like Ratehub.ca and LowestRates.ca let you see current offers from various lenders, helping you set expectations.
- Use a Mortgage Broker: At Mortgage Esquad, we work with leading lenders across Canada to find rates and terms that suit your unique financial profile, often lower than those offered by traditional banks.
- Get Pre-Approved Early: A mortgage pre-approval locks in your interest rate for 90 to 120 days, protecting you from potential hikes while you shop for a home.
- Monitor Rate Trends: Stay updated on Bank of Canada announcements and market conditions. Timing can play a big role in securing the most favourable rate.
Final Verdict: Should You Lock In Now?
If you’re planning to buy a home in 2025, now could be the right time to secure a low mortgage rate. Rates have dropped from their 2023–2024 highs, and while they may fall further, waiting too long could backfire if the market shifts again.
For those who value stability and predictability, a five-year fixed rate under 4% offers excellent value. If you have some flexibility in your budget and are optimistic about further rate reductions, a variable mortgage might be a better choice.
Ultimately, your best approach is to work with a trusted mortgage professional who understands the Canadian market, compares offers across lenders, and guides you through each step. At Mortgage Esquad, we’re here to help you lock in the best rate—and the right mortgage—for your future.