REPORT: Canadian mortgage rates and housing market trends 2020
Experts say we haven’t yet seen the full effects of COVID-19 on the housing market.
On average, Canadians save thousands of dollars per year by comparing rates with us.
Compare rates from Canada's leading banks and mortgage brokerages
If you're trying to buy a home in Toronto, you're probably on the lookout for the lowest mortgage rate you can get.
Luckily, we can help you with that.
LowestRates.ca brings you the best mortgage rates from 30+ banks and brokers in Toronto.
All you have to do is fill out the form above and you’ll be on your way to securing the cheapest mortgage rates in Toronto.
It's totally free and you're not obligated to do anything.
As Toronto is one of Canada’s most expensive housing markets, prospective homeowners are always on the lookout for the best mortgage rates. Luckily, we can help you with that.
LowestRates.ca shops the mortgage market for you by comparing the best mortgage rates in Toronto from more than 30 banks and brokers in your area. On top of that, the tool is entirely free to use and you’re not obligated to go with the rate we find for you.
All you have to do is fill out the form above and you’ll be on your way to securing the cheapest Toronto mortgage rates.
Toronto mortgage rates from LowestRates.ca partners have been consistently lower than the average bank rate. Since 2019, our Toronto 5-year fixed rates have been between more than two full percentage points lower than the average bank rate. Since January, the average 5-year fixed mortgage rates from Toronto lenders on LowestRates.ca was 2.65% whereas the average bank rate was more than 5%.
Two percentage points on a $500,000 mortgage makes a difference of more than $150,000 over the life of your loan.
On average, LowestRates.ca mortgages are 2.6 percentage points lower than the bank rate. On a $500,000 mortgage with a 20% down payment, this adds up to savings of:
|Month||Average LR 5-year fixed rate in Toronto||Average bank rate|
If you decide to apply for a mortgage through LowestRates.ca, congratulations! You’re likely going to get the best mortgage rate available and save thousands of dollars. But we have more good news for you.
Variable rates are historically lower than fixed rates. Over the past year though, they’ve been almost equal. Fixed rates have actually averaged out to be a fraction of a percentage point lower. Since January 2019, 67% of our users went with a fixed-rate mortgage and 33% went with a variable rate.
On average, LowestRates.ca variable rates are just 0.02 percentage points higher than our average fixed rate. On a $500,000 mortgage with a 20% down payment, this adds up to savings of:
|Month||Average LR 5-year fixed rate in Toronto||Average LR 5-year variable rate in Toronto|
The housing market in Toronto has been booming for years. Prices for single-detached family homes averaged well over $1 million during every month of 2019 and into 2020. By March 2020, the average price of a single-detached home in Toronto hit $1.4 million. Other forms of housing, such as townhomes and condos are also shooting up in price: the average price of a condo reached $700,00.
Take a look at the graphs below to get an idea of how the housing market in Toronto has changed in the past 12 months.
Single-detached home, condo and townhouse prices by city
Single-detached, condo and townhouse prices in the Greater Toronto Area
It’s not just home prices in Toronto proper that are soaring. The housing market is also heating up in the Greater Toronto Area. This can partially be attributed to a lack of housing availability in the city as well as the sky high prices we’re seeing in downtown Toronto communities.
While homebuyers in the GTA will still pay a bit less for a single detached home, townhouse or condo than their Toronto neighbours, that gap is quickly shrinking. At the beginning of March, 2020, the average price of a single detached home in the GTA rose to $1.2 million.
While variable rates and fixed rates on LowestRates.ca are closer than they’ve ever been in years, there are some key differences to be aware of.
A fixed rate stays the same for the duration of your mortgage. A variable rate, on the other hand, means that your rate won’t stay the same. Your lender will adjust it based on market conditions. In 2019, 67% of homebuyers in Toronto opted for a fixed rate while the other 33% selected a variable rate.
Mortgage term: A mortgage term is the length of time you’re committed to your mortgage rate, lender and the terms and conditions of your mortgage contract. The most popular mortgage term in Canada is five years, though terms can range from six months to 10 years. At the end of your term, you’ll renew your mortgage contract for the remaining principal at a new rate.
Amortization period: The amortization period and the mortgage term are often confused. While your mortgage term refers to the duration of your mortgage contract, the amortization period refers to the duration of your entire mortgage. In other words, the length of time it will take you to pay off your mortgage principal and interest. In Canada, the maximum amortization period is 35 years, but if your down payment is less than 20%, you’ll be required to purchase mortgage insurance from the Canadian Mortgage and Housing Corporation. If your mortgage is insured, your maximum amortization period is 25 years.
Toronto is one of the most expensive cities in the country to live in. LowestRates.ca calculated the cost of living in the City of Toronto depending on whether you own a home, rent, drive or take public transit.
We found that in order to own a home in the city, residents will pay over $4,000 per month in housing costs, not including the land transfer tax that’s paid in full at the time of the transfer of the deed. In order to own a home and a car in the city, residents will need to earn $94,000 before taxes. Residents who own just a home and opt to take public transit will need to earn at least $88,000 per year.
In addition to your mortgage rates, Toronto homebuyers will also need to think about these additional costs that come with purchasing a home in the city:
Down payment: A down payment refers to the amount of money you’ll pay a seller upfront. In Canada, you’re legally required to put down a specified percentage of your home’s total home price. Here are the rules according to the federal government:
Land transfer tax: The City of Toronto charges homebuyers a municipal land transfer tax on top of the provincial one. To date, Toronto is the only city that does this. On a home worth $1 million in Toronto, the homebuyer will also pay $32,950 in land transfer taxes; $16,475 in municipal taxes and $16,475 in provincial taxes.
Tax credits: There are a number of tax credits you may be eligible for when purchasing a home. They include:
Home insurance: While home insurance technically isn’t legally required in Canada, you’ll be hard pressed to find a lender who will give you a mortgage without one. Home insurance protects your home from perils that insurance companies are willing to cover. These are also referred to as “insured perils.”
The government offers first-time buyers financing of up to 5% of the price of a home (up to 10% if it’s a new-build). If you decide to use the First-Time Home Buyer Incentive, you’re entering a mortgage with the Government of Canada. You also need to pay the government back when you sell the home or after 25 years — whichever comes first.
Your down payment: The size of your down payment is the primary contributor to the size of your mortgage loan. It also factors significantly into determining your mortgage rate. The size of your down payment is a signal to lenders about how capable you are of paying off your mortgage. When it comes to down payments, the more you can put down, the better.
Your debt service ratios: Ontario lenders look at a number of other factors when calculating your mortgage rates. These are known as debt ratios and can be grouped into two categories:
LowestRates.ca works with 30 banks and brokers across the country to bring you the best rates from lenders in Toronto. We work with our partners to consolidate their best deals and offers, and then we let them compete for your business.
Getting the best mortgage rates is one great way to save money on your mortgage, but it’s one of many things you can do to increase the overall affordability of your mortgage. Some of these features might include prepayment privileges and portability.
Experts say we haven’t yet seen the full effects of COVID-19 on the housing market.
If you’re planning to sell your house or break your mortgage before the end of your term, there could be fees to pay.