5 Years of Mortgages in Canada

May 2013 marks RateSupermarket.ca’s 5th Birthday! To mark this special occasion, we’re throwing back to 2008 with a 5 Years of Mortgages Retrospective.

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Learn Even More About Mortgages

What is the Difference between a fixed and a variable mortgage rate?

A fixed mortgage rate is set for the length of the mortgage term. It can not increase or decrease during this time, even if market conditions change. They are a great option for buyers who want stability in their mortgage budgets, and want to know exactly what their monthly payments will be.

A variable mortgage rate is based on the Overnight Lending Rate, which is set by the Bank of Canada. When this key interest rate is low, variable mortgage rates follow suit, and simultaneously rise when the rate is increased. The Overnight Lending Rate has sat at one per cent since September 2010.

Want even more information about fixed and variable mortgage rates? Connect with a mortgage expert today.

Variable mortgage rates used to be the frontrunner due to being priced lower than fixed options over the past five years - until fixed rates started catching up with record lows of their own. Why the sudden dip (and interest in fixed options)? New CMHC rules introduced last summer, have effectively shrunk the buyer pool - and lenders have been edging each other lower to catch more market share. It all started with BMO's jaw dropping intro of the 2.99% last November, which sparked many a mortgage war across our Best Mortgage Rates Page.

How does the Overnight Lending Rate Work?

The Overnight Lending Rate is set by the Bank of Canada, and is used in turn as an indicator for variable mortgage rates.

When the economy is down and out, the BoC lowers the rate as part of stimulus measures. This makes it cheap to borrow, and encourages consumers to pump money back into the economy. When things look brighter, though, up goes the rate - along with your variable mortgage payments!

Infographic Sources

RatePulse, RateSupermarket.ca, 2010 - 2013

Canadian Mortgage and Housing Corporation: Housing Observer 2009

Canadian Mortgage and Housing Corporation: Housing Market Outlook - Canada editions 2009, 2011, 2012

Canadian Association of Accredited Mortgage Professionals: “Annual State of the Residential Mortgage Market in Canada” 2012: