When the central bank raises rates, mortgage rates increase, making borrowing more expensive. Conversely, when the Bank of Canada lowers rates, mortgage rates decrease, making borrowing more affordable. Understanding MortgagesIn Canada, there are two main types of mortgage rates to choose from:Fixed Rate: With a fixed-rate mortgage, the interest rate remains constant throughout the mortgage term, typically 1 to 10 years. Historically, fixed rates have been more common, but variable rates gained popularity in late 2021 due to lower variable rates and higher fixed rates. Variable mortgage rates have risen, and major lenders have raised their fixed mortgage rates in line with rising bond yields.
