Real Estate

Question about mortgage rates

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  • Sep 26th, 2018 1:19 pm
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Sep 26th, 2018 11:57 am
choclover [OP]
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Oct 7, 2007
9337 posts
5153 upvotes

Sep 26th, 2018 11:57 am

Question about mortgage rates

I have also thought of trends in Canadian residential mortgage rates being directly tied to the Bank of Canada rate.

However, for the first time that I can recall, we are starting to see the Bank of Canada hold Canadian federal bank rates firm while the U.S. continues to increase their federal reserve rate.

I am wondering if the U.S. federal reserve rate or if any other factors aside from the Bank of Canada rate can cause residential mortgage rates go up?

If so, what are these factors?
3 replies
Sep 26th, 2018 12:06 pm
rapashoo
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Mar 22, 2010
4010 posts
2029 upvotes

Sep 26th, 2018 12:06 pm

Answers may vary depending on Variable vs. Fixed term mortgage. Variable it's really based on BOC's key interest rate + whatever bank is making. For fixed, they are based on Canadian Government Bond so the more attractive our bond is (bond yield goes down) the lower fixed mortgage rate would be (very simple explanation than the reality)

So many variables that could throw off especially under Trump's regime, which directly affect cross border economy.
Sep 26th, 2018 12:15 pm
GalvToronto
Deal Addict
Mar 20, 2017
1370 posts
1165 upvotes

Sep 26th, 2018 12:15 pm

BoC does not look at US rate policy at all. BOC is data dependent only.
Of cause whatever happens in US has a major influence on Canada and economical data, but it happens with delay and not for one to one proportion.
Therefore, BoC can and will perform a similar to US monetary policy, but with slower pace, not equally same.

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