Over the past 25 years, interest rates in Ontario have fluctuated significantly, influenced by economic cycles, inflation control measures, and global events. For an overview:
- Fixed Mortgage Rates: Historically, fixed mortgage rates have generally ranged from around 3.0% to 7.0% depending on the time period and term length. For example, in the early 2000s, 5-year fixed mortgage rates were above 7%, but by the 2010s, they had decreased significantly, reaching as low as 3.28% in 2021. As of 2024, fixed rates are currently averaging around 4.74% from major lenders.
- Variable Mortgage Rates: Variable rates have generally been lower than fixed rates during periods of economic stability but tend to fluctuate more with changes in the Bank of Canada’s policy rates. Over the last 25 years, these rates have ranged from approximately 2% to over 6%. Currently, variable rates are averaging around 6.02%, having risen significantly due to recent interest rate hikes by the Bank of Canada.
The long-term trend shows that fixed rates tend to offer stability, especially during periods of economic volatility, whereas variable rates can be more attractive in lower interest rate environments but are riskier during rate hikes.
If you're trying to predict future rates, the consensus suggests a potential decrease in 2024 as inflation cools and the Bank of Canada aims to stabilize the market. However, for now, fixed rates remain more attractive than variable rates.