What happens when a 3-year fixed term ends?

At maturity you can renew with your current lender or switch to another lender penalty-free, because the term has ended. Your new rate will be whatever the market offers at that time — roughly three years from now, around mid-2029. Nobody can guarantee where rates will be then, which is exactly the trade-off you accept for the shorter commitment.

How much will my monthly payment be at 3.94% over 25 years?

Payment depends on balance, rate and amortization. As an illustration only, a $400,000 mortgage amortized over 25 years at about 3.94% works out to roughly $2,088 per month before property tax, insurance or other costs. Run your own numbers through a mortgage payment calculator rather than relying on examples.

When is the next Bank of Canada rate announcement?

September 2, 2026. The Bank of Canada held its target for the overnight rate at 2.25% on July 15, 2026, its sixth consecutive hold, and prime at major banks has been 4.45% since October 2025. Note that fixed rates follow Government of Canada bond yields rather than the policy rate, and the 5-year benchmark yield rose to about 3.35% by August 20, 2026. Market expectations are not forecasts or guarantees.

3-Year Fixed Mortgage Rates Canada — August 2026

Q: What are 3-year fixed mortgage rates in Canada in August 2026?

As of August 21–23, 2026, public Canadian comparison tables showed the lowest advertised insured 3-year fixed rate around 3.89% to 3.94%. Advertised lowest rates typically assume an insured or insurable, owner-occupied purchase with strong credit — many borrowers are quoted above these benchmarks depending on insurance status, property and file strength. These are public benchmarks, not offers or guarantees.

Q: Is a 3-year fixed cheaper than a 5-year fixed right now?

They were essentially tied in late August 2026 — the lowest advertised 3-year fixed was about 3.89% to 3.94% versus about 3.94% to 4.09% for the lowest 5-year fixed, a difference of roughly 0 to 20 basis points depending on the source. When the terms price nearly the same, the choice is mostly about how long you want payment certainty, not about saving on rate.

Q: Why did the 3-year fixed become so popular in 2026?

After the 2020–2021 low-rate cohort rolled into renewals, many borrowers wanted a middle path: shorter than five years so they are not locked in if rates fall, but longer than one or two years so they are not re-shopping annually amid elevated costs. The large 2026 renewal wave reinforced that demand. Popularity does not make it the right term for everyone.

Quick takeaway: As of August 21–23, 2026, public Canadian comparison tables showed the lowest advertised insured 3-year fixed near 3.89%–3.94%. The Bank of Canada's overnight rate was 2.25%, prime 4.45%, and the 5-year Government of Canada benchmark yield had climbed to about 3.35% by August 20. Next rate decision: September 2, 2026. Lowest advertised figures assume strong, typically insured files — your quote may differ.

3.89%–3.94%Lowest advertised insured 3-year fixed across public tables, August 21–23, 2026.

~3.35%Government of Canada 5-year benchmark yield as of August 20, 2026.

2.25%Bank of Canada overnight target, unchanged since late 2025.

Sept 2Next Bank of Canada rate announcement date.

Where 3-year fixed rates sit in August 2026

Mortgage rates vary by lender, province, insurance status and file strength. The table below summarizes lowest-in-market advertised pricing reported by two major public comparison sites in late August 2026.

Term	Lowest advertised (WOWA, Aug 21)	Best market rate (Ratehub, Aug 23)
2-year fixed	~3.94%	~3.89%
3-year fixed	~3.89%	~3.94%
4-year fixed	—	~4.09%
5-year fixed	~3.94%	~4.09%
5-year variable	~3.35%	—
1-year fixed	—	~4.59%

Figures are rounded public benchmarks collected August 21–23, 2026 and change frequently, sometimes daily. Lowest advertised rates usually assume an insured or insurable, owner-occupied purchase with strong credit and verified income. Conventional/uninsured pricing, rentals, refinances and weaker files are typically quoted higher. See current Canadian mortgage rates for today's snapshot.

What drives the 3-year fixed rate

A common misconception: fixed mortgage rates do not move when the Bank of Canada moves. Fixed terms — including the 3-year — are priced off Government of Canada bond yields of similar duration plus a lender spread and any embedded insurance pricing. Two things mattered most in August 2026:

Bond yields drifted up. Bank of Canada data show the 5-year benchmark yield climbing from about 3.28% on August 14 to roughly 3.35% by August 20, with the 3-year around 3.04%–3.11%. Rising yields put upward pressure on lender fixed pricing even while the policy rate sits still.
Inflation re-accelerated. Canada's headline inflation rose to 3.0% in July from 2.8% in June, driven mainly by gasoline and travel costs, while core measures stayed closer to 2.2%. That mix gives the Bank less room to ease and supports the case for yields staying elevated — which flows directly into fixed-rate pricing.

The policy rate matters mainly for variable rates, which are quoted as a discount to lender prime (4.45%). Six consecutive holds have left variable pricing flat since late 2025.

3-year vs 5-year fixed vs variable

In late August 2026 the lowest advertised 3-year and 5-year fixed rates were nearly identical — roughly 3.89%–3.94% versus 3.94%–4.09%, a spread of about zero to twenty basis points. When terms price that close, the decision is mostly structural, not about squeezing out rate:

Certainty horizon. A 3-year fixed locks your payment through mid-2029. If you value being done with rate-watching sooner, that has real value even at the same rate.
Re-shop frequency. A shorter term means you face renewal again sooner — either opportunity or hassle, depending on where rates go and how much you enjoy negotiating.
Penalty exposure. Breaking any closed fixed mortgage early triggers a prepayment charge, often an interest rate differential. Three fewer locked years generally means less exposure to a deep IRD if life forces a break.
Variable alternative. The lowest advertised 5-year variable (~3.35%) still started meaningfully below fixed pricing, but it moves with prime and market pricing implied rising odds of a hike by late 2026 or early 2027. Nothing here recommends one structure over another — stress-test whichever payment you would actually carry.

Run side-by-side scenarios in the mortgage payment calculator, and compare the trade-offs in more depth on our fixed vs variable guide.

If you are choosing a 3-year fixed at renewal or purchase

The 2026 renewal wave means a large share of 3-year quotes this year are going to renewers, not buyers. Either way, the same checklist applies:

Compare the whole offer, not just the rate. Prepayment privileges, penalty calculation, standard charges, porting rules and blend-and-extend options differ meaningfully between lenders.
Confirm your insurance tier. Insured, insurable and uninsured pricing can differ materially; a $750,000 purchase with 15% down prices differently than the same home with 20% down.
Start early. Most lenders will hold a rate for 90 to 120 days before maturity. Renewal letters are first offers, not final ones — lenders routinely price retention differently than acquisition.
Switching at maturity is penalty-free. Because the term ends, moving lenders at renewal avoids a prepayment charge. Details and timing guidance are on the mortgage renewal rates page.

See what a 3-year fixed would cost you

Advertised lowest rates assume a near-perfect file. RateShop can put current 3-year, 5-year and variable offers from dozens of lenders side by side using your actual balance, down payment or equity, insurance status and timeline — so you compare real offers, not table headlines.

Compare 3-year fixed mortgage rates

Illustration: payment at ~3.94% over 25 years

For scale only — this is arithmetic, not advice or a quote:

Mortgage balance	Approx. monthly payment (25-yr am, ~3.94%)
$300,000	~$1,566
$400,000	~$2,088
$500,000	~$2,610
$600,000	~$3,132

Payments shown exclude property tax, heating, insurance and any other costs lenders include in affordability math. Use the mortgage payment calculator with your own figures.

Rate disclaimer

All rates, yields, inflation and market figures on this page are general educational information gathered from public sources on or about August 20–24, 2026 and may be out of date, incomplete or superseded without notice. RateShop does not guarantee any rate, approval or product availability. Actual mortgage rates depend on lender criteria, credit profile, verified income, property type and value, mortgage purpose, down payment or equity, insurance status, amortization and documentation. Payment examples are illustrative arithmetic, not offers. Market-implied rate expectations are not forecasts and frequently prove wrong. This page does not provide personalized mortgage, legal, tax or financial advice. Speak with a licensed mortgage professional about your own situation.

Frequently asked questions

What are 3-year fixed mortgage rates in Canada in August 2026?

As of August 21–23, 2026, public comparison tables showed the lowest advertised insured 3-year fixed around 3.89% to 3.94%. Those benchmarks assume strong, typically insured files — many borrowers are quoted higher depending on insurance status, property type and overall file. See current Canadian mortgage rates.

Is a 3-year fixed cheaper than a 5-year fixed right now?

They were essentially tied in late August 2026 — roughly 3.89%–3.94% on the 3-year versus 3.94%–4.09% on the 5-year, depending on source. At that spread, the choice is about how long you want payment certainty, not about saving on rate.

Why did the 3-year fixed become so popular in 2026?

Many borrowers want a middle path after the renewal wave: shorter than five years in case rates fall, longer than one or two years to avoid re-shopping annually at elevated prices. Demand does not make it right for everyone — it depends on your plans and risk tolerance.

What happens when my 3-year fixed term ends?

You can renew with your lender or switch penalty-free, since the term has matured. Your new rate reflects the market in roughly three years' time, around mid-2029. No one can guarantee where rates will be then — that uncertainty is the trade-off for the shorter lock-in. Plan ahead with our renewal rate resources.

How much would my payment be at about 3.94% over 25 years?

A $400,000 balance amortized over 25 years at roughly 3.94% works out to approximately $2,088 per month before taxes and other housing costs. Illustration only — calculate your own in the mortgage payment calculator.

When is the next Bank of Canada announcement?

September 2, 2026. The Bank last held at 2.25% on July 15, 2026, its sixth consecutive hold, with prime at 4.45%. Remember that fixed rates track bond yields — the 5-year benchmark was about 3.35% on August 20, 2026 — not the overnight rate itself.

3-year fixed mortgage rates in Canada: August 2026