Business · Economy · 5 hrs ago
Canadian variable mortgage rates could rise faster than central bank rates
The lowest advertised rate for a five-year variable mortgage in Canada rose to 3.66% from 3.41% after the Bank of Canada raised its rate by 0.25 percentage points.
Variable mortgage rates are generally set at a discount to a bank’s prime rate, its baseline lending rate.
Lenders may shrink that discount as interest rates rise, which can make mortgage rates climb faster than the Bank of Canada’s rate.
This also happened in 2022, when lenders reduced variable-rate discounts as fixed and variable rates rose quickly.
Fixed mortgage rates have increased substantially in 2026, and variable rates are expected to rise alongside the central bank’s rate in early 2027.
New borrowers and people renewing mortgages could face steeper increases if lenders cut discounts while the Bank of Canada makes further hikes.
The lowest advertised five-year variable mortgage rate in Canada rose to 3.66 per cent after the Bank of Canada increased its rate by 25 basis points.
Variable mortgage rates for new loans and renewals could rise faster than the central bank’s rate in coming months.
Ontario-based mortgage broker Victor Tran said lenders may reduce discounts from their prime rates as interest rates increase.
The lowest advertised variable rate was about 80 basis points below the five-year fixed mortgage rate.
- Who
- Canadian mortgage borrowers, lenders and the Bank of Canada.
- What
- Variable mortgage rates could increase faster than the central bank’s rate for new loans and renewals.
- When
- The Bank of Canada raised its rate on Wednesday; further increases could come in the coming months.
- Where
- Canada.
- Why
- Lenders may reduce discounts on their prime rates as interest rates rise.
This story does not have two clearly opposing sides.
Ratehub.ca’s lowest advertised five-year variable mortgage rate was 3.41 per cent.
The Bank of Canada raised its rate by 25 basis points.
Ratehub.ca’s lowest advertised five-year variable mortgage rate had risen to 3.66 per cent.
Variable mortgage rates could rise faster than the Bank of Canada’s rate as lenders reduce discounts.
- Five-year variable rate
- 3.66 per cent as of Thursday afternoon
- Previous five-year variable rate
- 3.41 per cent last week
- Bank of Canada rate increase
- 25 basis points on Wednesday
- Variable rate gap
- About 80 basis points below the five-year fixed rate
- Rate source
- Ratehub.ca
1 source
What people are saying
Typically what we’ve seen in the past is the discount declining when rates are increasing.