May 3, 20263 min read
This decision can affect both approval and the cost of the mortgage for years. Variable mortgage rates are closely connected to lender prime rates, and prime rates usually respond when the Bank of Canada changes its target for the overnight rate.
What changes the outcome
Here is what matters most:
- A policy-rate increase normally puts upward pressure on prime, which can raise the interest rate on variable mortgages.
- A policy-rate cut normally puts downward pressure on prime, although each lender sets its own prime rate.
- The Bank of Canada announces its policy decision on scheduled dates during the year.
- The effect on your payment depends on whether your variable mortgage has an adjustable payment or a fixed-payment structure.
If you carry a variable mortgage, budget for more than one possible rate path.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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