Let’s Talk Interest Rates!
The current Bank of Canada (BoC) Overnight rate is 2.25%. It has been here without change since October 2025. The general consensus amongst the big banks is that it will not change prior to the end of the year. The BoC has limited range to lower rates further without causing inflation. That is unless the economy falls more than expected. This rate of 2.25% is at the lower end of what the BoC considers the neutral range. So if everything stays on track, the expectation is that rates will go up slightly in the coming years. Variable rate mortgages are tied directly to the BoC overnight rate.
The Government of Canada Bond yields have been increasing slowly over the last few months. The fixed mortgages are tied to the bond rate. These increases may be tied to global insecurity.
This means that the spread between variable rate mortgages and fixed rate mortgages will be widening if this trend continues. More people shopping for mortgages may be choosing variable products in the coming months to years.
Wishing all a wonderful Fall season!