Todays Mortgage Rates
|1 year fixed||2.69||Yes
|3 year fixed||3.04||Yes|
|5 year fixed||2.99||Yes|
|3 year variable||2.45||Yes|
|5 year variable||2.21||Yes|
Fixed Mortgage Rates
Fixed rate mortgage loans are primarily influenced by the yield on Canadian government bonds (bond yields) of corresponding maturity. The difference between the two rates (mortgage rates and bond yields) represents the yield that financial institutions require to lend the funds out on the mortgage market.
With a fixed rate mortgage, your interest rate won’t change throughout the term of your mortgage. There will be no surprises; your payments will always be exactly the same and you will know how much of your mortgage will be paid off by the end of the term. Regardless of what happens to interest rates you still pay the same rate.
Variable Mortgage Rates
Variable mortgage rates are essentially determined by commercial banks’ prime rates, which are mainly influenced by the Bank of Canada’s prime interest rate. Thus, an increase in the prime interest rate almost automatically leads to an equivalent increase in variable mortgage rates. The Bank of Canada raises its prime interest rate when it wants to fight inflation.
When you have a variable rate mortgage for the length of your term, your payments will fluctuate depending on interest rates. (Rates go up and down dependent on the bank’s prime lending rate, and can change from month to month.) When rates change, your payment amount will stay the same, but the amount that is applied to the principal will vary. e.g if interest rates fall, more of the payment will be applied to the principal – if they go up, you will pay more to interest and less to the principal, which means it will take longer to pay the mortgage.
The Mortgage Broker Industry has grown dramatically over the last decade. There are over 50,000 government licensed Mortgage Agents and Mortgage Brokers in Canada that have met specific education, experience and suitability requirements.
There are over a 100 financial institutions offering mortgages. They compete with banks by issuing mortgages to people that the banks reject and secondly, competing on price.
Most of these Lenders, although well known and established in the finance industry don’t have high street store fronts and deal directly with Brokers to save on administrative and advertising costs. The Brokers are effectively the store front for the Lenders. This is how non-bank lenders reduce costs, stay competitive and are usually able to offer better rates.