How are mortgage rates set?

After years at or near historic lows, interest rates have started to rise. That’s great news if you’re a saver, but what does that mean for mortgage rates?

If you’re in the market for a mortgage or considering renewing one, you may be interested to know how the Bank of Canada rate affects mortgage rates.

While lending rates may sometimes coincide with central bank rates, the reality is that most mortgage rates — particularly locked-in, longer-term ones — are dictated primarily by rates in the bond markets, not the central banks’ rates as many people believe.

Mortgage rates often drop or increase without movement at the central banks. In fact, mortgage rates often lead the way, up or down, for the central bank rates. In that sense, mortgage rates provide a more sensitive indicator of where interest rates are generally headed. Bond rates also dictate longer-term GIC rates typically.

For more information about mortgages and mortgage rates, check out or contact a Casera mortgage specialist at your neighbourhood branch today.