Why are the "Discounted Rates" so much lower than the "Posted Rates" at RBC, TD, and Scotiabank?

Posted Rates are deliberately high and serve two primary purposes: they act as a starting point for negotiation, and they are used by banks to calculate the substantial penalty if you break a fixed-rate mortgage early. Discounted Rates are the actual, competitive rates offered to qualified borrowers and represent the true cost of the loan. Always negotiate to secure a rate below the Posted Rate.

I am renewing my mortgage now (end of 2025). Should I choose a 3-year or a 5-year fixed term?

Given current market expectations that the Bank of Canada may implement small cuts in 2026, but significant cuts are unlikely until 2027, many homeowners are opting for the 3-year fixed term. This allows them to lock in a stable payment until 2028 and potentially renew at significantly lower rates if the economic forecast holds. The 5-year term is suitable only for those who require absolute budget certainty until 2030.

RBC, TD, Scotiabank Mortgage Rates (End 2025): Compare & Forecast

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Review of Mortgage Rates at Major Canadian Banks: RBC, TD, and Scotiabank

Homenly 🏡 News Oct 18, 2025

The end of 2025 marks a critical period for the Canadian housing and mortgage market. Many homeowners who secured historically low 5-year fixed rates back in 2020 are now facing the daunting task of renewal at significantly higher current rates. Understanding the current offerings and strategies of the major players—Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), and Bank of Nova Scotia (Scotiabank)—is key to navigating 2026’s financial landscape.

This review focuses on the current market dynamics at the close of 2025, comparing the core mortgage offers from these three banking giants.

1. The Financial Context (End of 2025)

As 2025 draws to a close, the market is defined by several key factors:

Bank of Canada Policy: The Bank of Canada has maintained the Overnight Rate at a restrictive level for much of 2024–2025 to curb inflation. However, market expectations have largely priced in the potential for modest rate cuts in the first half of 2026.
Fixed Rate Pressure: Fixed rates—which follow the bond market—remain elevated but may have already peaked, depending on global economic stability.
Variable Rate Volatility: Variable rates—tied to the banks' Prime Rates—are also high. Borrowers are weighing the short-term cost against the long-term potential for relief from rate cuts.

The main challenge for renewing borrowers is the substantial payment shock as they transition from rates around 2-3% (from 2020) to the current range of 4.5–5.5%.

2. Mortgage Rate Comparison: RBC, TD, and Scotiabank

Major Canadian banks publish Posted Rates, but the vast majority of clients receive significantly lower Special or Discounted Rates. These negotiated rates are the ones homeowners should focus on.

RBC (Royal Bank of Canada)

As Canada's largest bank, RBC offers security and a vast network. Its discounted rates are crucial benchmarks for the market.

Term	Rate Type	Typical Discounted Rate (Estimate, End of 2025)	Client Focus
5-Year	Fixed (Closed)	$\sim 4.60\% - 4.80\%$	Best for those prioritizing payment predictability amidst the uncertainty surrounding 2026 rate trajectory.
3-Year	Fixed (Closed)	$\sim 4.40\% - 4.60\%$	Appealing to borrowers who believe significant rate cuts will occur in 2027–2028, allowing for renewal at a lower rate sooner.
5-Year	Variable (Closed)	$\sim 4.20\% - 4.40\%$ (Prime - 0.50% to -0.30%)	A risky choice unless a borrower has high confidence in a sharp easing of the Bank of Canada rate in early 2026.

RBC Key Feature: Strong portability options, which is valuable for clients considering a move during their term.

TD Bank (Toronto-Dominion Bank)

TD is known for its extensive branch presence and often provides attractive bundling incentives for existing, multi-product clients.

Term	Rate Type	Typical Discounted Rate (Estimate, End of 2025)	Client Focus
5-Year	Fixed (Closed)	$\sim 4.70\% - 4.90\%$	Rates may sometimes sit slightly higher than competitors, but TD can offer better prepayment privileges or other banking perks.
3-Year	Fixed (Closed)	$\sim 4.50\% - 4.70\%$	A competitive middle-ground term.
5-Year	Variable (Closed)	$\sim 4.40\% - 4.60\%$ (Prime - 0.45% to -0.25%)	TD offers a generous 15% annual prepayment limit, a major advantage for clients seeking to aggressively pay down their principal.

TD Key Feature: High annual prepayment flexibility (15% of the original principal) and options for payment re-evaluation on variable mortgages.

Scotiabank (Bank of Nova Scotia)

Scotiabank is often differentiated by its innovative products, especially the Scotia Total Equity® Plan (STEP).

Term	Rate Type	Typical Discounted Rate (Estimate, End of 2025)	Client Focus
5-Year	Fixed (Closed)	$\sim 4.55\% - 4.75\%$	Scotiabank is often highly aggressive in its 5-year fixed pricing to attract new business.
3-Year	Fixed (Closed)	$\sim 4.35\% - 4.55\%$	Frequently one of the most competitive options for shorter fixed terms.
5-Year	Variable (Closed)	$\sim 4.05\% - 4.25\%$ (Prime - 0.65% to -0.45%)	Scotiabank may offer lower variable rates to encourage adoption of its flexible STEP product.

Scotiabank Key Feature: The Scotia Total Equity® Plan (STEP) combines a traditional mortgage with a Home Equity Line of Credit (HELOC), providing maximum flexibility and access to home equity under one facility.

3. Essential Mortgage Strategy for End of 2025

📌 Renewals: Negotiate Aggressively

If your 5-year mortgage is up for renewal, be prepared. The renewal offer sent by your current bank (RBC, TD, or Scotiabank) will often not be their best rate.

Do Not Accept the First Offer: Use competitive quotes from other lenders (mortgage brokers, smaller credit unions) as leverage in negotiations with your primary bank.
Shop Around: You are no longer required to pass a "stress test" to switch lenders upon renewal (provided your loan amount and amortization remain the same), giving you more freedom to find the best deal.

📈 Fixed vs. Variable: The 2026 Outlook

The choice at the end of 2025 is a bet on the Bank of Canada:

Choose Fixed (e.g., 3-Year): This strategy is highly popular. It locks in a manageable payment, allows the borrower to weather the high-rate environment, and positions them to renew in 2028 when rates are more broadly expected to be lower.
Choose Variable: This is for financially secure borrowers with a high-risk tolerance. While it offers the possibility of immediate savings if the Bank of Canada cuts quickly, cuts may be slower than expected, and you could pay more than a comparable fixed rate throughout 2026.

4. Conclusion for Canadian Homeowners

At the end of 2025, RBC, TD, and Scotiabank are offering competitive, yet distinct, mortgage products.

Choose RBC if you prioritize a vast network and stability.
Choose TD if high prepayment privileges (15%) and integrated banking services are important.
Choose Scotiabank if you need flexible access to your home equity through the unique STEP plan.

Crucially, always shop around and negotiate fiercely for the discounted rate, which can be significantly lower than the posted rate. In the current environment, saving even half a percent (0.5%) will translate into thousands of dollars in savings over the mortgage term.

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