Best 3-Year Fixed Mortgage Rates

What is a 3-year fixed rate?

The term “3-year fixed rate” is made up of two parts: the length of time and the type of mortgage.

The length of term is how long you agree to a certain set of conditions for your mortgage, and the type of mortgage dictates the interest rate you’ll pay. A fixed rate mortgage means that the interest rate won’t change throughout the duration of the term (in this case, three years).

Who is a 3-year fixed term best for?

There are a couple reasons to go for a 3-year fixed term:

1.       You expect to fully pay off your mortgage within three years, or move

2.       You want to strike a balance between locking in savings and the potential to renew at a lower rate

However, there are a few downsides to this as well:

1.       If rates are going up, you will have to renew into a higher rate years sooner than a longer term

2.       If you want to switch lenders at every renewal, you’ll have to pay more in switching costs

3.       If rates are going down, you would save more money with a variable rate

How popular is a 3-year fixed term?

In Canada, most homebuyers choose a fixed rate mortgage. Mortgage terms between 2 – 4 years are the second most popular option but are far behind 5-year fixed terms. 2 – 4-year terms are the most popular with homebuyers under the age of 55, at 23%. Those with a mortgage over the age of 55 overwhelmingly choose a 5-yearmortgage and are almost evenly split between a 2 – 4-year term and a 6 – 10-year term.

With the fear of rising interest rates, many homebuyers and mortgage holders needing to renew will probably opt for a fixed mortgage.