VARIABLE RATES

We receive a lot of questions about how variable interest rates work, what impacts them, and where they make sense.

Below we have a breakdown of what you need to know, the current market outlook, and what to expect going forward!

    The Bank of Canada holds key rate at 5.00%

    The Bank of Canada carries out monetary policy by influencing short-term interest rates.

    It does this by adjusting the target for the overnight rate on eight fixed dates each year.


    THE CHART BELOW SHOWS A RECENT HISTORY OF these adjustments ⬇️

    The schedule for Bank of Canada Rate Announcements

    All information above was taken from the Bank of Canada website

    Latest Update: December 6th, 2023

    Bank of Canada MAINTAINS THE key interest rate AT 5.00%

    The current policy rate is at 5.00%


    FOR THE fifth TIME SINCE MARCH 2022

    The Bank of Canada has paused - No Rate Hike!


    THIS MEANS THERE WILL BE NO QUALIFICATION OR FINANCIAL IMPACT

    This applies to all mortgage holders or active buyers


    The next interest rate announcement is IN december

    There will be another announcement shortly on January 24, 2023.


    DO YOU HAVE MORE QUESTIONS ABOUT INTEREST RATES?

    Please reach out if you have any questions or would like to review your current Mortgage options.

    ⬇️  LEARN MORE ABOUT INTEREST RATES BELOW ⬇️

    • What Is A Variable Rate?

      A variable-rate mortgage is a mortgage that does not have a static interest rate.


      The interest rate itself can adjust throughout the life of the term. It can adjust up or it can adjust down and this is dependent on a variety of factors, including market conditions, and the Bank of Canada.

    • What Is Prime Rate?

      This is a benchmark interest rate that banks used to determine lines of credit, mortgages, and often personal loans.

    • What Is The Bank of Canada

      The Bank of Canada is the nation's central bank. 


      Its principal role is to promote the economic and financial welfare of Canada.

    • How Often Does The Prime Rate Change?

      Prime rates only adjust when the bank of Canada adjusts its lending rate


      The Bank of Canada meets 8 times per year to make decisions on a wide variety of economic factors and announce a series of updates and changes.


      One of those changes could be an adjustment up or down to the lending rate.


      Historically the government, more frequently, does NOT make a change to the rates when they meet.

    • What Is The History Of The Prime Rate?

      Over the last 10 years, we've seen interest rates stay relatively static. There's been about a 2% deviation from the high end to the low end of interest rates.


      Often we hear people concerned about interest rates skyrocketing. If we look back over a 10-12 year period, there's no such thing as a skyrocketing interest rate other than an increase or decrease of 1-2%.

    • Should I Be Worried If Prime Rate Goes Up?

      If we see an interest rate increase or decrease, it's usually 0.25%.


      If you have a mortgage right now, for every $100,000 that you owe it would be approximately a change of about $12 to your mortgage if rates were to go up or down by 0.25%.


      If you're borrowing $500,000, and the bank was to decrease your rate by 0.25%, that would mean your payment will go down by $60. That's a $6 difference in your payment.


    Questions to ask about whether to stay with a Variable


    1) Would you be likely to refinance in the term?


    If so, stay variable. You may refinance to take advantage of lower rates, qualify for buying another property, consolidate debt such as credit.


    2) Would you possibly sell in the term?


    If so, stay variable. An average penalty on a 5 year fixed penalty is 4%-6% of the balance of loan vs. 3 months of interest.


    3) Would you be worried about a $12 per $100,000 of mortgage increase to payments for every .25% Bank of Canada move?


    If not, stay variable.


    4) Are you comfortable paying 1-1.50% more in interest to have a fixed payment?


    If so, maybe consider a static payment variable first! Then consider the fixed rate if this is not an option.

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