All
About
Rates
2010
May 31
July 19
Sept 7
2015
Jan 20
July 14
2017
July 11
Sept 5
2018
Jan 16
July 10
Oct 23
2020
Mar 3
Mar 15
Mar 26
2022
Mar 2
Apr 13
Jun 1
Jul 13
Sep 7
Oct 26
Dec 7
2023
Jan 25
Jun 7
Jul 12
+ 0.25%
+ 0.25%
+ 0.25%
- 0.25%
- 0.25%
+ 0.25%
+ 0.25%
+ 0.25%
+ 0.25%
+ 0.25%
- 0.50%
- 0.50%
- 0.50%
+ 0.25%
+ 0.50%
+ 0.50%
+ 1.00%
+ 0.75%
+ 0.50%
+ 0.50%
+ 0.25%
+ 0.25%
+ 0.25%
Bank of Canada
Directly impacts Variable Rate Mortgages
Schedule for 2024
Jan 24
Mar 6
Apr 10
Jun 5
Jul 24
Sep 4
Oct 23
Dec 11
No Change
No Change
No Change
Fixed
vs
Variable
3 months Interest or IRD (Interest Rate Differential Penalty (whichever is higher)
Locked in for Term Chosen
Rate and Payments won't change
Cannot change rate during term
Rates are determined and impacted by the Canada Bond Yields
See graph below to see historic rates
Terms Available
1, 2, 3, 4, 5, 7, 10yr Terms
3 months Interest
Penalty
Rate fluctuates with the Prime Rate
Payments will rise and fall with rate change
Can lock-in to a Fixed Rate at any time
Must choose from the fixed rates available at that time
Rates are determined and impacted by the Bank of Canada
See graph below to see historic rates
Terms Available
5yr Term
How to calculate your Penalty
Three Months of Interest
Step 1
A
Amount you are paying out
Step 2
B
Your current Interest Rate expressed as a decimal (ie.3.25% = .0325)
Step 3
C
A x B = C
Step 4
D
C / 4 = D, D is the estimated Three Months Interest Cost
Step 5
E
D + Reinvestment Fee (if applicable) = E, E is your estimated Early Payout Penalty
IRD - Interest Rate Differential
Step 1
A
Interest Rate on your Mortgage
Step 2
B
Current best interest rate available with your lender with a comparable remaining term
Step 3
C
A - B = C, which is the difference between your rate and current rates available
Step 4
D
Amount you are paying out
Step 5
E
Number of months remaining in the term of your mortgage
Step 6
F
(C x D x E) / 12 = F, F is the estimated Interest Rate Differential Amount
Step 7
G
F + Reinvestment Fee (if applicable) = G, G is your estimated Early Payout Penalty
**This penalty calculation may differ from the way some banks calculate their penalty so it is always important to
contact us directly to get a quote on your penalty.
History on Rates
5yr Fixed vs Variable Mortgage Rates from 2006 - Today
5yr Fixed Rates vs
5yr Bond Yields 2000 - Today
Historic Prime Lending Rates from 1935 - Today
source: Ratehub.ca
The Beginnings of Canada's Central Bank in 1935
The Bank of Canada was created as part of the Bank of Canada Act in 1935. It was recommended by the Royal Commission in response to the economic conditions of the Great Depression. In March 1935, the Bank of Canada was opened to the public as a private institution with shares sold to public investors. It was quickly nationalized as a public institution by an amendment to the Bank of Canada Act in 1938.
1977 - 1991: Stagflation
After the upward change in 1955, the Bank of Canada rate continued to rise slowly throughout the 1960s and early 1970s. In October 1978, the benchmark rate hit double digits for the first time at 10.25%. This was due in part to the global oil crisis and the OPEC oil embargo. With record-high prices for oil in August 1980 that continued into 1981, the Bank of Canada rate hit an all-time high of 20.03% in August 1981. The lowest rate reached during this period was 7.14% (March 1987).
1935 - 1945: The Great Depression and World War II
The Bank of Canada rate (not officially the target overnight rate until much later in the century) started at 2.5% in 1935 and ended at 1.5% in 1945. The economy strengthened during the war as Canada played a vital role in supplying natural and manufactured resources to the Allies. There was also increased employment, especially of women. The decrease in the Bank of Canada rate encouraged people and businesses to borrow money to invest in new manufacturing plants and housing.
1991 - 2008: Economic Recovery
After the recession of the 1980s, the Bank of Canada rate between 1991 – 2009 generally went downwards with only a few exceptions. The inflation-target rate was introduced at the beginning of this period.
1945 - 1955: The Post-War Period
After World War II, the Bank of Canada rate did not rise until October 1955, when it was changed to 2.0%. This low-interest rate environment promoted investment in new infrastructure, manufacturing, housing and consumer goods.
2009 - 2017: The Great Financial Crisis
In March 2009, the BOC rate dipped below 1% for the first time to 0.5% in response to the Great Financial Crisis. Despite a minor recovery, in 2014, oil prices dropped a staggering 60%, causing a recession in Canada's oil-driven export economy. The Bank of Canada rate then dropped from 1.25% to 0.75% in 2015.
2018-2021: Low to High Inflation and COVID-19
Despite widespread economic growth, 2018 and 2019 were marked by continued low inflation, preventing the Bank of Canada from raising rates any higher than 1.75%. This was quickly reversed with the impact of COVID-19 with a 1.50% decrease in March 2020. The Bank of Canada rate now lies near its lower limit at 0.25%. They were unlikely to be raised anytime soon due to the deflationary impact of reduced consumer spending and distressed economy. However with the increase of inflation that may change.
Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed, which benefits borrowers. When inflation causes higher prices, the demand for credit increases, raising interest rates, which benefits lenders.
Today’s combination of low mortgage rates and high inflation is exceedingly rare. So one of those conditions is likely to end soon — and if prices remain elevated, economists say, mortgage rates will rise.