What Are Mortgage Rates?

Mortgage rates are the interest rates charged by lenders when you borrow money to buy a home. In Canada, these rates determine how much you pay back monthly and over the life of your mortgage. They can be either fixed or variable.

• Fixed-rate mortgage: Your rate stays the same for the entire term, offering predictable payments.
  
  
• Variable-rate mortgage: Your rate can change based on the lender’s prime rate, meaning your payments may go up or down.
  
  

How Mortgage Rates Are Determined

Mortgage rates in Canada are influenced by several factors:

• Bank of Canada policy interest rate
  
  
• Economic conditions (inflation, employment, etc.)
  
  
• Your credit score and financial profile
  
  
• The lender’s internal policies
  
  

When the Bank of Canada raises its policy rate, lenders usually follow with higher mortgage rates.

How to Get a Competitive Rate

• Shop around: Compare rates from different banks and mortgage brokers.
  
  
• Improve your credit score: A better score can help you qualify for lower rates.
  
  
• Consider your term length: Shorter terms may offer lower rates but higher renewals.
  
  
• Work with a mortgage broker: Brokers can access rates from multiple lenders and find one that fits your needs.
  
  

Why Mortgage Rates Matter When Buying a Home

Even a small difference in rates can change your total cost significantly. For example, a 0.5% rate change could mean thousands of dollars in savings or extra costs over the life of your mortgage.