Overview

Key Mortgage Rates

1. Prime Rate
   The prime rate is the basis for most variable mortgage rates and is influenced by economic conditions. When the Bank of Canada adjusts rates to manage the economy, banks may follow by changing their prime rate, which affects variable mortgage rates directly.

2. Bank Rate
   Set by the Bank of Canada, the bank rate (or overnight rate) influences borrowing costs across the economy. It doesn’t directly set the prime rate, but it guides banks, especially when making adjustments to lending rates.

3. Fixed Mortgage Rate
   Fixed rates are set based on bond markets rather than the prime or bank rate. They offer stability, as the rate and payments remain constant for the mortgage term, regardless of market changes.

What These Rates Mean for Your Mortgage

• Variable Rate Mortgages: These rates fluctuate with the prime rate. When economic conditions shift, your payments may rise or fall.
• Fixed Rate Mortgages: Payments remain stable for the term, regardless of changes in the economy or other rates.

Choosing the Right Rate for You

Your choice will depend on your comfort level with payment changes and whether you prefer the predictability of fixed payments or the potential savings of variable rates.

For more in-depth information, check out our blog post: Understanding Mortgage Rates: Prime Rate, Bank Rate, and Fixed Rate Made Simple.

Need More Guidance? If you’d like help determining which mortgage type is right for you, our team is here to assist. Reach out today to explore your options.