If you’ve been keeping an eye on interest rates, you’ve probably seen the headlines: the Bank of Canada held its overnight interest rate steady. But what does that actually mean if you’re thinking about buying a home, renewing your mortgage, or refinancing?
The answer? It depends on the type of mortgage you have, your financial situation, and what your plans look like for the future!
Let’s break it down. 🏡
Variable vs. Fixed Mortgage Rates: What’s the Difference?
One of the biggest things to understand is that fixed and variable mortgage rates don't respond to interest rate news in exactly the same way.
Variable Mortgage Rates
Variable mortgage rates are generally tied to lenders’ prime rates, which are influenced by the Bank of Canada's overnight rate.
When the Bank of Canada holds its rate steady, variable mortgage rates generally remain unchanged too, assuming your lender doesn't make a separate adjustment.
If you already have a variable-rate mortgage, your interest rate may stay the same for now. If you're considering one, remember that your rate can rise or fall as economic conditions change.
Depending on your mortgage terms, changes in interest rates can affect your monthly payments or the amount of each payment that goes toward interest versus principal.
Fixed Mortgage Rates
Fixed mortgage rates work a little differently. They're influenced in part by bond yields, which can move up or down based on market expectations, inflation, and economic conditions.
That means fixed mortgage rates can change even when the Bank of Canada leaves its overnight rate alone.
If you're shopping for a mortgage, don't assume that a rate announcement automatically means fixed rates will drop — or stay the same!
What Does This Mean If You're Buying a Home?
If you're planning to buy a home, interest rates are certainly important, but they're only one piece of the puzzle.
Your purchase price, down payment, monthly payment, property taxes, insurance, utilities, and ongoing maintenance costs all contribute to what you can comfortably afford.
And here's something else worth remembering: the interest rate isn't the only thing you can negotiate when buying a home.
Depending on the property and current market conditions, you may have opportunities to negotiate the purchase price, request a home inspection condition, or include other appropriate conditions in your offer.
A lower purchase price can make a meaningful difference to your overall borrowing needs, so it's important to look at the complete picture rather than focusing on interest rates alone.
Renewing or Refinancing? Start Planning Early!
If your mortgage renewal is coming up, don't wait until the last minute to explore your options.
Start a conversation with your mortgage professional well before your renewal date. They can help you compare available rates, understand your mortgage terms, and determine whether staying with your current lender or exploring other options makes sense.
Refinancing is another decision that deserves a closer look. Whether you're considering accessing equity, consolidating debt, or adjusting your mortgage to suit changing financial circumstances, it's important to understand the costs and long-term implications before making a move.
Sometimes a lower interest rate makes sense. Other times, flexibility, prepayment privileges, penalties, or the length of your mortgage term may be just as important.
The lowest rate isn't automatically the best mortgage. The best choice is the one that fits your overall financial plan.
Why We Recommend Working With a Mortgage Professional
As Realtors, Carl and I believe that having the right people in your corner makes a difference.
A knowledgeable mortgage broker or mortgage specialist can help you understand your borrowing options, explain the differences between mortgage products, and determine what may work best for your circumstances.
A mortgage broker can often compare options from multiple lenders, while a mortgage specialist may work directly with a particular financial institution. Both can be valuable resources, depending on your needs.
And if you're not sure who to call, we're happy to refer you to a few great mortgage professionals we've connected with!
We believe in building relationships and connecting our clients with trusted professionals who can help them make informed decisions — whether you're ready to buy today, planning for a move next year, or simply trying to understand your options.
There's no pressure to make a decision before you're ready. Sometimes, the best first step is simply asking questions.
Let's Look at the Whole Picture
Interest rate announcements will continue to make headlines, but your real estate decisions should be based on more than a single number.
Whether you're buying your first home, moving up, downsizing, or approaching mortgage renewal, understanding your options can help you move forward with greater confidence.
Thinking about buying, selling, or planning your next move? Carl and I would love to chat! We can help you understand what's happening in the Calgary real estate market and connect you with a mortgage professional who can help you explore your financing options.
Because finding the right home is important — but making sure it fits your life and your finances is just as important.
Let's make your next move a well-informed one!