How Mortgage Rates Are Determined

Mortgage rates are influenced by multiple factors, including the Bank of Canada’s policy rate, bond yields, inflation expectations, and economic growth forecasts.

Fixed vs. Variable Rates

Fixed rates offer stability but often come at a premium. Variable rates historically cost less over time but expose borrowers to potential increases. Your choice should align with your risk tolerance and financial situation.

Rate Trends for 2025

Current forecasts suggest moderate rate fluctuations throughout the year, with potential easing in the latter half as inflation pressures subside. However, geopolitical events could rapidly change this outlook.

Impact on Affordability

Even small changes in interest rates can significantly affect your monthly payments. A 1% increase on a $500,000 mortgage could raise your payment by approximately $250 monthly.

Strategies for Rate Shopping

Don’t just accept your bank’s first offer. Mortgage brokers can access multiple lenders, and rate comparison websites can give you a broader picture of available options.