What Mortgage Term to Pick?

Popularity of Mortgage Term Lengths and Types (Jul 17–Sep 17, 2025)

Between July 17 and September 17, 2025, Canadian borrowers picked: 5-year fixed (46.1%), 3-year fixed (33.1%), 5-year variable (11.2%), 3-year variable (3.0%), and a rounding-error share for 1-year fixed (1.0%) and 2-year fixed (1.3%). Data source: WOWA.

What’s driving the 5-year fixed at 46.1%?

Two things: pricing and peace of mind. Five-year fixed is still the benchmark term in Canada, so lenders price it aggressively and consumers recognize it instantly. After the rate shocks of 2022–2023, a big chunk of borrowers simply want out of the “what’s the Bank of Canada doing next week?” game. Locking in for five years buys predictability, and for many households that matters more than squeezing out a few extra basis points.

Why is 3-year fixed so strong at 33.1%?

Because it’s the “have-your-cake-and-eat-it” term in a declining-rate mindset. If you believe rates have more room to fall into 2026, a 3-year lets you avoid variable-rate whiplash now while positioning you to refinance sooner at potentially cheaper money later.

What happened to variable?

5-year variable at 11.2% and 3-year variable at 3.0% tells you “variable fatigue” is real. Households that rode prime-linked payments up in 2022–2023 don’t have the appetite to relive it—even with cuts starting in 2024 and more expected through 2026. Many borrowers are opting to wait out the transition in a short or mid-term fixed rather than gamble on the pace of cuts.

Why are 1- and 2-year fixed terms barely used (1.0% and 1.3%)?

The short terms look clever on paper—“I’ll bridge to lower rates next year”—but they come with higher posted rates, quicker renewal risk, and the hassle/cost of re-qualifying under the stress test sooner. Most people deciding between “a bit more flexibility” and “not thinking about this again for a while” are choosing the latter.

The bottom line

This pattern isn’t random. It’s a rational response to:
- lingering risk aversion after volatile rate moves,
- meaningful odds of further fixed-rate easing over the next 12–24 months, and
- lenders’ best pricing stacked on the 5-year shelf with the 3-year as the tactical alternative.

Conclusion? Canadians are clustering at 5-year fixed for security and 3-year fixed for timing—both are strategies to de-risk today while keeping optionality for a potentially cheaper refinance window by 2028.

Broker vs. Bank: where Canadians are getting mortgages now

Current broker market share in Canada is 43.3% of originations vs. 56.7% through banks. That has been steadily increasing over the years.

What was broker market share 10 years ago?

In 2015, the (then-CAAMP) Spring Mortgage Report summarized it plainly: banks 52%, brokers 34%, with the remainder split across credit unions and others. Segment detail from CMHC’s 2015 Mortgage Consumer Survey backs up the trend: broker usage was 55% among first-time buyers, 42% among repeat buyers, 33% among refinancers, and ~21% among renewers—all lower than where brokers sit today overall.

So broker share has climbed roughly 9–10 points in a decade (mid-30s → low-40s). Why?
- Comparison shopping got easier and more valuable. In a high/volatile-rate era, spread-hunting matters; brokers shop multiple lenders at once.
- Rise of non-bank lenders. Mortgage finance companies expanded and compete aggressively via the broker channel, which widened product/credit options for clients who don’t fit a bank box.
- Complexity pushed advice to the forefront. Stress-test rules, insurer guidelines, and prepayment/penalty nuances drove more consumers to expert guidance instead of one-product conversations.
- Digital workflows without losing a human. Brokers leaned hard into tech while keeping personalized advice—an attractive combo for busy households.

Why talking to an experienced broker matters (especially right now)

Choosing between 5-year fixed and 3-year fixed isn’t just about the headline rate. It’s about your amortization, renewal timing versus the rate cycle, prepayment flexibility, penalty math if you break early, and where you see income and housing plans going. A seasoned mortgage broker looks at all of that, compares dozens of lender options—including non-bank solutions you won’t see on your branch’s menu—and structures the file so you’re not accidentally paying thousands in penalties or stuck renewing at the worst possible moment. Put bluntly: the term you choose can save or cost you real money, and a broker’s job is to land you on the right side of that line.

If you want this decoded for your situation, let’s talk. I’ll map your cash flow, renewal window, and risk tolerance against today’s pricing and the most likely rate path, then recommend a term and lender that protect your downside and keep your options open.