Real Estate

Question about mortgage rates

  • Last Updated:
  • Sep 26th, 2018 1:19 pm
[OP]
Deal Fanatic
Oct 7, 2007
9051 posts
4884 upvotes

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
Deal Addict
Mar 22, 2010
3272 posts
1085 upvotes
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.
Deal Addict
Mar 20, 2017
1366 posts
1156 upvotes
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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