Analysis of five-year variable mortgage rates as of October 2024
In October 2024, the five-year variable mortgage rates of the major Canadian banks underwent significant adjustments, directly affecting homebuyers and homeowners. This article examines the current rates, compares them, analyzes their impact, and offers guidance for choosing the right mortgage product in the current context.
Five-year variable mortgage rates in October 2024
In October 2024, the prime rate of the major Canadian banks stood at 6.45% as of September 4, then was reduced to 5.95% on October 23. (wowa.ca) Five-year variable mortgage rates are generally indexed to this prime rate, with a margin determined by each financial institution.
Here is an overview of the prime rates of the major banks in October 2024:
- Royal Bank of Canada (RBC): 5.95%
- Toronto-Dominion Bank (TD): 5.95%
- Scotiabank: 5.95%
- Bank of Montreal (BMO): 5.95%
- Canadian Imperial Bank of Commerce (CIBC): 5.95%
- National Bank of Canada: 5.95%
- Desjardins: 5.95%
These prime rates serve as the basis for determining the variable mortgage rates offered to clients. Banks typically apply an additional margin or a discount depending on the borrower's profile and market conditions.
Comparison of rates and impact on buyers
The decrease in the prime rate in October 2024 had a direct impact on the five-year variable mortgage rates. For example, a 0.50 percentage point reduction in the prime rate can lead to an equivalent decrease in the variable mortgage rate, thereby reducing borrowers' monthly payments.
Example of impact on monthly payments:
- Mortgage of $400,000 over 25 years:
- Initial rate: 6.45%
- Rate after reduction: 5.95%
- Monthly savings: approximately $118
- Annual savings: approximately $1,416
These savings can improve homeownership accessibility for many Canadians by reducing the total cost of the loan.
Tips for choosing the right mortgage product
In the current context, it is essential to carefully evaluate your options before choosing a mortgage product. Here are some tips:
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Compare offers: While prime rates are similar across the major banks, the margins applied can vary. It is therefore crucial to compare offers from several institutions.
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Assess your risk tolerance: Variable rates can fluctuate depending on Bank of Canada's decisions. If you prefer stability, a fixed rate might be more appropriate.
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Consider your holding horizon: If you plan to sell your property or refinance in the short term, a variable rate could offer more flexibility.
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Consult a financial advisor: A professional can help you assess your financial situation and choose the product best suited to your needs.
Conclusion
The adjustments to five-year variable mortgage rates in October 2024 offer opportunities for Canadian homebuyers and homeowners. By staying informed and carefully evaluating your options, you can make well-informed decisions to optimize your mortgage financing.
Sources: - Canada’s prime rate history (1935 - October 2025) | WOWA.ca - Historical drop in mortgage rates: Impact on your mortgage loan | hypotheques.ca
