Low Interest Rates Not Having the Same Impact

The Bank of Canada held its key interest rate steady at 0.25 per cent last Wednesday. While the overnight rate has shed 150 basis points (bps), bank notes 5-year mortgage rates only declined 17 bps from the beginning of the pandemic. Lenders have not brought the rates down further because many feel they have a higher risk and lower reward with higher home prices and low mortgage rates.

Until the economy fully gets back on its feet, the absence of rate hikes means variable mortgage rates will remain low, and anyone with a variable rate can expect prime to remain unchanged. Fixed rates will stay near historic lows.

Note: One basis point is equivalent to 0.01% (1/100th of a percent).