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Information is general and not legal, tax, or investment advice. Strategies like the Smith Manoeuvre (Maneuver) and cash or rental damming involve risk. Consult a qualified tax professional.
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How mortgage rates work in Canada

What drives mortgage rates, and why fixed and variable move differently.

By Pragmatic Mortgage Editorial TeamReviewed by Licensed Broker Team8 min readUpdated 2025-02-01

Table of contents

Fixed vs variable pricingWhy your scenario changes the rateUse rate comparisons responsiblySources & further readingFAQs

Fixed vs variable pricing

Fixed rates track bond yields, while variable rates track the prime rate. When bond yields fall, fixed rates typically follow. Variable rates move when prime changes.

Why your scenario changes the rate

Insured, insurable, and uninsured files price differently. Down payment size, amortization length, and occupancy can all move you between buckets.

Use rate comparisons responsibly

The lowest rate is not always the best deal. Consider prepayment privileges, penalties, and portability before choosing.

Sources & further reading

  • Bank of Canada: Policy interest rate

Related tools & next steps

  • Rate explorer
  • Rate comparison calculator
  • Fixed vs variable rates

FAQs

Do posted rates matter?

Posted rates are reference points. Most borrowers qualify for discounted rates based on their scenario.

Are fixed or variable rates better?

It depends on your risk tolerance and timeline. Use side-by-side comparisons for clarity.

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