What you need to know about how fixed and variable rates change differently

What you need to know about how fixed and variable rates change differently

Over the past few weeks we have seen changes in the fixed and variable mortgage rates.  Every time I receive a  call from someone about the rate changes the same discussion occurs.  So here is what you need to  know.

Fixed and variable mortgage rates are priced differently.

If the fixed rates are moving up or down it is in direct relationship to the bond yield and not due to any change by the Bank of Canada.

Description below from Investopedia

“Bonds have an inverse relationship to interest rates; when interest rates rise, bond prices fall, and vice-versa.”


The Bank of Canada controls the overnight lending rate which in turn sets pricing for the Prime lending rate by the all lenders including banks, credit unions and mortgage companies.  When the rates are reduced this lowers the cost of borrowing for anyone with a variable rate mortgage or line of credit.  Any change to fixed rates do not have any impact on the variable rates.

Current pricing (March 21st 2020)

5 year fixed rates were down last week but up again a bit this week.  Rates vary for insured (high ratio borrowers), insured and uninsured conventional mortgages.  Don’t rely on rates quoted on the Internet online sites.  These can be misleading.  Always consult your independent mortgage planner.

Prime rate is 2.95%.  New pricing for variable mortgages and lines of credit were adjusted this week by all lenders to reduce the discounts offered to clients.  This means not all of the reduction and savings was passed onto the consumer.  Consult your independent mortgage planner.