Analysis of five-year variable mortgage rates in October 2024

In October 2024, the five-year variable mortgage rates of Canada's major banks underwent significant adjustments, directly affecting homebuyers and homeowners. This article examines the rates in effect, compares them, analyzes their impact, and offers advice 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 was 6.45% as of September 4, then was reduced to 5.95% on October 23. (wowa.ca) The 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 a base to determine the variable mortgage rates offered to customers. 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 reduction in the prime rate in October 2024 had a direct impact on 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 the impact on monthly payments:

• Mortgage of $400,000 over 25 years:
• Initial rate: 6.45%
• Rate after reduction: 5.95%
• Monthly savings: about $118
• Annual savings: about $1,416

These savings can improve homeownership affordability for many Canadians by reducing the total cost of borrowing.

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:

1. Compare offers: While prime rates are similar among the major banks, the margins applied can vary. It is therefore crucial to compare offers from several institutions.

2. Assess your risk tolerance: Variable rates can fluctuate based on the Bank of Canada's decisions. If you prefer stability, a fixed rate might be more appropriate.

3. Consider the holding horizon: If you plan to sell your property or refinance in the short term, a variable rate could offer more flexibility.

4. 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 variable mortgage rates in October 2024 offer opportunities for Canadian homebuyers and homeowners. By staying informed and carefully evaluating your options, you can make informed decisions to optimize your real estate financing.

Sources : - Canada's prime rate history (1935 - October 2025) | WOWA.ca
- Historic drop in mortgage rates: Impact on your mortgage | hypotheques.ca