Two Big Banks Slash 5-Year Fixed Rates. 2.99% is “Officially” Here Again (Updated)

big bank cuts 5-year posted rateTD and CIBC just became the first Big 6 banks to advertise 5-year fixed rates below 3% since 2017.

This morning, TD and CIBC chopped their advertised 5-year fixed specials by 32 basis points (to 2.97%) and 30 bps (to 2.99%), respectively. Banks seldom cut that much in one sitting. Albeit, sources tell us both banks have been selling 5-year mortgages below 3% on a discretionary basis for weeks.

Indeed, most 5-year rates are already sub-3%. But it’s the fact that banks are now openly displaying Canada’s most popular term with a “two-handle” that is psychologically meaningful. It puts all competitors on notice that 2.99% is the absolute most you can price at if you want to win business from well-qualified borrowers.

It’s notable that just six short months ago, advertised 5-year fixed rates at the Big 6 banks were in the 3.89% region. The market thought they were on their way to 4%-plus based on economist expectations (yes, I know, why do we bother mentioning economist forecasts?). How fast the market can turn.

Real 5-year Fixed Rates

Fixed mortgage rates are winning the popularity contestThe true 5-year rate market is at 2.90% or less (based on discretionary Big Bank mortgage rates). If you want that kind of rate from a major bank, without haggling, Scotiabank’s eHome portal (latest Scotia mortgage rates) is where to look. It’s still the only big bank we’re aware of that advertises rock-bottom rates online (albeit, behind a login screen).

Smaller banks are different. They’re not afraid to show all their cards. motusbank (2.82%), Alterna Bank (2.84%) and Simplii Financial (2.89%) are all national banks openly advertising rates at 2.90% or below.

The lowest 5-year fixed rates remain from:

Stress Test Update

In other news, Scotiabank cut its 5-year posted rate today to 5.19%. That’s important to the extent it affects Canada’s minimum qualifying rate (stress test rate).

But in this case, there is no impact (yet). That’s due to the complex way the Bank of Canada calculates this official benchmark.

The BoC has told us:

“When there are two modes [in major bank 5-year posted fixed rates] of equal distance from the simple 6-bank average (as there is today), the mortgage qualifying rate is the mode [average] from the banks with the largest value of assets booked in Canadian dollars.”

So we manually calculated which banks have the largest value of assets booked in Canadian dollars, and then confirmed it with the Canadian Banker’s Association. Here are the numbers:

Bank 5-year Posted Rate 5.19% Posted 5.34% Posted
TD 5.34% $543,372,762
RBC 5.19% $534,542,888
Scotia 5.19% $476,252,649
CIBC 5.34% $439,383,892
BMO 5.34% $298,414,662
NBC 5.19% $200,057,587
 Totals 5.34% $1,210,853,124 $1,281,171,316

So the nay’s win. The stress test will not drop from 5.34%—not until there’s one or more new rate changes.

Wouldn’t it be nice if the market set the stress test rate used to qualify over 4 out of 5 mortgages in this country? Not some convoluted formula driven by six companies?

Any number of methods would be better than what we’re stuck with now, so long as it’s easy to understand and transparent (one possibility: the government’s five-year bond yield plus 350 bps).

Other Rate Changes of Note

Mortgage rate transparency at TD

CIBC lowered the following special fixed rates this morning:

5-year: 3.29% to 2.99%
7-year: 3.39% to 3.29%

Scotiabank cut the following posted fixed rates:

3-year: 4.44% to 4.39%
5-year: 5.34% to 5.19%
7-year: 5.79% to 5.69%
10-year: 6.29% to 6.19%

TD dropped the following special fixed rates:

3-year: 2.96% to 2.92%
5-year: 3.29% to 2.97%


  • Motus just droped 8bps from 2.9 to 2.82.

  • Matt says:

    This is inaccurate. I just got 2.79% on a fixed 4 year with Scotiabank today.

  • DB says:

    The ghost of Jim Flaherty was seen floating around Commerce Court and Toronto–Dominion Centre this week, wagging his finger at CIBC and TD.

  • Ganesh says:

    CMLS is giving 2.89 fixed for 5years

  • Mike hunt says:

    scotiabank got me a beauty rate at 2.25 over 5 years on two properties.

  • Vince says:

    Mike: Is that 2.25% variable?

  • Moses says:

    Very informative article, thank you so much for your time and effort. Much appreciated

  • Wilbon says:

    TD Bank 2.86% 3 Year Fixed from 2.96%

  • Wilbon says:

    2.79% 4 years Fixed BMO

  • 2legit says:

    Hi Spy

    Why do banks like BMO show 3.99% for a 5 year fixed when other banks are 1% under that?

    Do they think we’re stupid?

    • The Spy says:

      Hey 2legit,

      I think you’re referring to BMO’s Smart Fixed (low frills) mortgage? It’s almost like they’ve given up on that product. BMO routinely and significantly undercuts its advertised Smart Fixed rate with their standard mortgage rate.

      But more to the general question, major banks are like poker players. They don’t show you all their cards because they don’t want you to think you have a better hand (negotiating leverage). That’s very slowly starting to change so there’s hope for more transparency…someday.

  • Wilson says:

    How likely is it for the mortgage stress test rate to fall? also it seems like it should fall further given the low rate environment for bonds/treasury yields.

    • The Spy says:

      Hi Wilson, It’s highly likely that it will fall in the not-too-distant future. And yes, based on market rates, the benchmark 5yr posted rate should fall more than it has. Unfortunately, banks control it and they’re being very slow to move it (for a number of reasons that we’ve written about in recent weeks).

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