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Rates Left Unchanged by Bank of Canada – Now What?

February 2, 2016

Mortgage rates were left untouched after the latest Bank of Canada decision – so what does that mean for you?


If you’re a home-owner with a mortgage, you can’t help but take notice when talk about interest rates pops up in the media. Each year like clockwork, one of Canada’s big banks comes out with a catch marketing campaign to promote a ‘new, low mortgage rate’ with a long list of terms and conditions few people bother to read.


So when the Bank of Canada makes an announcement saying that they will not be moving their key lending rate, the overnight lending rate, Canadians take notice. In particular, home-owners with variable rate mortgages.




Bank of Canada announcements regarding the overnight lending rate are so critical because the Bank of Canada’s overnight lending rate has a direct influence on whether you will be paying less or more interest on your mortgage payment. While the interest rate on fixed mortgages do not fluctuate up or down, the interest rate on a variable rate mortgage may or may not move with the decisions made by the Bank of Canada.


The value of the variable rate mortgage is that it typically comes with an interest rate significantly lower than its fixed rate equivalent – for example, a 5 year variable rate mortgage might fetch a rate around 2.30%, while the same 5 year fixed rate mortgage might be around 2.64%. Traditionally, at MonsterMortgage.ca, we’ve suggested to clients that they take the variable rate product, and pay more towards their mortgage as if they were paying a fixed mortgage rate. This has certainly been a winning strategy for the last 5 years, and academics, such as York University Professor Milevsky, would argue that the variable rate mortgage has been the way to go for even longer.


If you’re interested in learning more about fixed rates and variable rates, please feel free to e-mail MonsterMortgage.ca at Info@MonsterMortgage.ca, give us a call or read more of our blogs online.


As always, thanks for reading!