Big Six Banks Hold Posted 5-Year Fixed Rates Near 6.1% as Discounts Widen

Vancouver | 14-Nov-2025, 10:20 EST

Canada’s Big Six banks — RBC, TD, Scotiabank, BMO, CIBC and National Bank — are holding their posted 5-year fixed mortgage rates around 6.1%, even as discounted fixed mortgage rates continue falling into the 4.20%–4.70% range. The gap between posted and discounted rates, already wide in 2024, has grown even deeper as lenders adjust quietly to cheaper funding conditions without touching their official posted benchmarks.

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Why Posted Rates Remain at ~6.1%

Posted rates often appear irrelevant to new borrowers, but they play a critical structural role in Canada’s mortgage system. Banks have strategic incentives to keep them high, even when real-market rates (discounted rates) fall.

The three major reasons:

1. Penalties on Fixed-Rate Mortgages

Most fixed-rate borrowers who break their mortgage early are charged an Interest Rate Differential (IRD).
IRD penalties are calculated using:

posted rate at origination – current comparable posted rate

If posted rates stay high, the IRD remains high — allowing banks to collect significantly larger penalties.

This is one of the biggest reasons posted rates are kept sticky.

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2. Benchmarking Qualification and Renewals

Even though most borrowers now qualify using the stress test rate, banks still use posted rates to set internal qualification rules for:

• early renewals
• blend-and-extend offers
• conversions from variable to fixed

A higher posted rate allows banks to keep qualification criteria conservative, reducing risk during a period of slower economic growth.

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3. Marketing & Negotiation Leverage

Banks often advertise posted rates publicly, then offer discounted rates privately through:

• mortgage specialists
• broker channels
• loyalty pricing
• cross-sell packages (chequing + credit card + mortgage)

This lets banks maintain the appearance of “giving a discount,” which improves negotiation optics even though the discounted rate is the real market rate.

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Discounted Rates: Now 4.2%–4.7%

While posted rates hold firm, true consumer-facing rates continue declining.

Current discounted fixed 5-year rates (November 2025):

• Insured borrowers: ~4.20%–4.35%
• Uninsured / conventional borrowers: ~4.45%–4.70%

These rates reflect cheaper mortgage funding as 5-year Government of Canada bond yields drift lower. Bond yields entered the 2.60%–2.75% range this week, creating headroom for rate cuts even without a shift in posted benchmarks.

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Why Insured Rates Are Lower

Insured borrowers (less than 20% down payment) enjoy lower rates because:

• Lenders face no default risk
• Capital requirements are lower
• Insured mortgages securitize easily
• Funding spreads tighten faster during easing cycles

This is why insured borrowers are seeing steep drops, while uninsured borrowers see slower movement.

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What This Means for Borrowers Renewing in 2025–2026

Many Canadians renewing in 2025 will be coming off ultra-low pandemic rates in the 1.39%–2.29% range.

Even with today’s discounted rates around 4.2%–4.7%, many borrowers face renewal shocks. But posted rates matter more than people think:

• Borrowers breaking early will face larger IRD penalties
• Posted rates affect internal bank calculations for mid-term renegotiations
• Fixed-to-variable conversion costs may remain high due to posted spreads

The high posted rate environment allows banks to maintain significant pricing power over renewing borrowers.

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Why Banks Are Not Lowering Posted Rates Yet

Bank executives have three concerns:

1. Economic slowdown risk — Canada’s GDP contracted mildly in Q3, and banks want strong buffers.
2. Household debt levels — With high national debt ratios, a cautious pricing posture reduces risk.
3. Profitability pressure — Lowering posted rates would force re-benchmarking penalties and cut into stable revenue streams.

In short: discounted rates can fall freely, but posted rates remain anchored for structural reasons.

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Outlook for Winter 2025–2026

Analysts expect:

• Posted rates to stay at ~6.1% for months
• Discounted rates could drop further if bond yields fall below 2.50%
• Variable rates to be shaped mainly by BoC guidance in December

If yields continue easing, conventional borrowers may see discounted 5-year fixed rates approach 4.00%, though this depends on inflation trends.

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The headline posted rate of 6.1% is misleading — it’s a benchmarking tool, not the real cost of borrowing. But its presence matters for penalties, renewals, and negotiating power.

Real-world discounted rates between 4.20% and 4.70% now shape the true mortgage market. Borrowers shopping in late 2025 should compare lenders aggressively, as the spread between banks, credit unions, and broker-channel lenders is widening.

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