Looking for the Lowest Mortgage Rates in Ontario?

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As of April 2025, mortgage rates in Ontario are in a period of change. While Canada’s housing market can always shift, a few key things—like the Bank of Canada’s decisions, the state of the economy, and even events around the world—play a big part in determining mortgage rates. If you’re thinking of buying a home or refinancing, it’s important to understand what’s affecting mortgage rates right now.

Mortgage Rates in Ontario Canada April 2025

In Ontario, mortgage rates in April 2025 are somewhat higher than they were in previous years.

If you’re looking for a fixed-rate mortgage, expect interest rates to range between mid-4% to mid-5%. On the other hand, variable-rate mortgages, which can change over time, are around the mid-4%. While these rates may seem high compared to the record-low rates we saw in the past, they’re still within a very reasonable range.

These rates are being influenced by the Bank of Canada’s (BoC) decisions, which are trying to control inflation and stabilize the economy. Many Canadians are adjusting to the idea that mortgage rates might stay higher for longer, which can affect their ability to borrow and the amount they pay each month.

Current Rates For Various Types of Mortgages

Purchase (Insured): 3.89% 5-Year Fixed

This is when you buy a home and put down less than 20% of the price. The government offers mortgage insurance through companies like CMHC, which protects the lender if you can’t pay back the loan. Because of the insurance, the interest rates on these mortgages are usually a little lower.

Purchase (Insurable): 3.94% 5-Year Fixed

This is similar to an insured mortgage but doesn’t always need insurance if your down payment is greater than 20%. The rates might be a bit better because there’s less risk for the lender.

Purchase (Uninsured): 4.24% 5-Year Fixed

If you put down at least 20% for a down payment, you don’t need mortgage insurance. This can result in better interest rates because the lender isn’t taking on as much risk, but the upfront cost of buying is much higher.

Purchase (Non-Prime/B Lender): 4.99% 3-Year Fixed

If you don’t have perfect credit or your financial situation is a little riskier, you might qualify for a non-prime mortgage. These mortgages usually come with higher interest rates because they’re riskier for the lender.

Refinance Prime: 4.29% 5-Year Fixed

If you already own a home and want to refinance your mortgage, a prime refinance is one where your credit is in good shape, and the lender gives you a reasonable rate. These rates are typically similar to the current market rates.

Refinance (Non-Prime/B Lender): 5.09% 3-Year Fixed

For those who don’t have great credit or other challenges, refinancing with a non-prime mortgage may be an option. These typically come with higher interest rates because they’re riskier for the lender.

HELOC Prime - P+0.50% (P=4.95%)

For borrowers who want a HELOC as their primary first mortgage, and have excellent debt-to-income ratios (GDS/TDS under 39% and 44%, respectively) and strong credit (minimum 680).

HELOC (Non-Prime/B Lender) - P+0.50% (P=4.95%)

For borrowers who would like to get a HELOC in 2nd position behind their existing first mortgage, with a maximum GDS/TDS of 50% and 50%, and a minimum credit score of 550.

Different Types of Mortgage Rates

There are several types of mortgages in Ontario, and each one has different features that can affect your monthly payments.

Fixed vs. Variable vs. Adjustable Mortgages

A fixed-rate mortgage means your interest rate stays the same for the length of your mortgage term, which is typically five years. This is a good option if you want predictability, since your payments won’t change over time.

A variable-rate mortgage means the interest rate can change based on the Bank of Canada’s policy rate or the lender’s prime rate. This can lead to lower payments when rates are low, but your payments could increase if rates go up.

An adjustable-rate mortgage is somewhere in between. The interest rate is still tied to the BoC’s rate or the prime rate, but your monthly payments can also change depending on how the rates fluctuate. This gives some flexibility, but it also means your payments can go up or down.

Impact of Bank of Canada Policy Rate on Mortgages

The Bank of Canada policy rate directly influences the prime rate and, in turn, mortgage rates. Here's how the process works:

1. Bank of Canada Policy Rate → Prime Rate:

The Bank of Canada policy rate (also called the overnight rate) sets the cost for banks to borrow money from the central bank for short-term lending.

When the Bank of Canada raises or lowers its policy rate, commercial banks generally adjust their prime rates accordingly. The prime rate is the rate at which banks lend to their most creditworthy customers (usually large businesses), and it is typically set as a few percentage points higher than the policy rate.

2. Prime Rate → Mortgage Rates:

The prime rate is a key benchmark for other interest rates, including mortgage rates. Many types of loans, including variable-rate mortgages, are often tied to the prime rate.

When the prime rate decreases, variable-rate mortgage rates usually go down as well, because they are often based on the prime rate plus a margin. As a result, homeowners with variable-rate mortgages may see their payments decrease.

Fixed-rate mortgages, on the other hand, are influenced more by the bond market and long-term interest rates rather than directly by the prime rate. However, if the Bank of Canada cuts the policy rate and it lowers the prime rate, it can sometimes cause bond yields to drop, which may also lower fixed mortgage rates.

If the policy rate increase leads to higher prime rates, borrowers may face higher mortgage rates, especially on variable-rate loans.

How Bond Yields Affect Fixed Mortgage Rates

What are Bond Yields?

A bond yield is the return an investor can expect from a bond over time, expressed as a percentage of its price. When people talk about bond yields in relation to mortgage rates, they’re typically referring to the yields on Government of Canada bonds (especially 5-year bonds, since they closely match the typical length of a fixed-rate mortgage in Canada).

These bonds are considered very safe investments because they are backed by the Canadian government. When people invest in these bonds, they are essentially lending money to the government in exchange for interest payments.

How Bond Yields Affect Mortgage Rates

Lenders' Cost of Borrowing: Mortgage lenders—like banks—often rely on bond markets to raise the money they lend out for fixed-rate mortgages. If investors are buying bonds and bond yields rise, it indicates that borrowing costs for lenders are increasing. To compensate for the higher cost of borrowing, lenders will raise their fixed mortgage rates.

Risk Premium: Bond yields reflect how much risk investors are willing to take when lending money. When yields rise, it suggests that investors are demanding a higher return for taking on more perceived risk, which in turn makes it more expensive for banks to borrow. Banks pass this increased cost onto consumers through higher mortgage rates.

Inverse Relationship

There's an inverse relationship between bond prices and bond yields. When bond prices go up (which typically happens when investors are looking for safe investments), yields go down. If bond yields drop, it becomes cheaper for lenders to borrow, so they can lower their mortgage rates for borrowers.

Conversely, when bond prices fall (and yields go up), the cost of borrowing for banks increases, so they raise their mortgage rates to maintain their profit margins.

Talk to a Reputable Mortgage Broker About Rates

As of April 2025, mortgage rates in Ontario are higher compared to previous years. Fixed-rate mortgages range from 3.89% for a 5-year insured mortgage to 4.99% for a 3-year non-prime mortgage. These rates are primarily influenced by the Bank of Canada’s actions to manage inflation and stabilize the economy.

There are various mortgage options available, such as insurable and uninsured mortgages, with rates ranging from 3.94% (5-year insurable) to 4.24% (5-year uninsured). Non-prime mortgages, which are for those with less-than-perfect credit, come with higher rates, such as 4.99% for a 3-year fixed non-prime mortgage.

The Bank of Canada’s policy rate has a direct impact on mortgage rates by influencing the prime rate, which affects variable-rate mortgages. Additionally, bond yields are a crucial factor for fixed-rate mortgages. When bond yields rise, lenders face higher borrowing costs, which leads to increased mortgage rates. When bond yields drop, lenders may lower their rates accordingly.

Whether you're looking to refinance your mortgage or get a HELOC in Ontario, since every financial situation is unique, it’s important to consult with a reputable mortgage broker. They can help you navigate your options and find the best rates that suit your personal circumstances, as rates can vary depending on factors like your credit score, down payment, and the type of mortgage you choose.