What’s the rate???  Well, that depends…..  There are a number of factors that determine what interest rate applies to a particular mortgage scenario.  Below are details of some factors to consider:

Property Value and Purchase Price
This is the price you pay, or the appraised value, whichever is lower, for the property being mortgaged. The cost of the home affects the loan-to-value ratio (LTV). Homes over one million dollars cannot be insured or insurable, meaning they automatically fall into the conventional category, which typically comes with higher interest rates. High-priced homes also carry more risk for lenders due to potential market volatility, especially in BC’s more expensive regions such as Greater Vancouver.

Loan-to-Value Ratio (LTV)
LTV is calculated as (Mortgage Amount ÷ Property Value) × 100%. For example, if you buy a one million dollar home with a two hundred thousand dollar down payment, your mortgage is eight hundred thousand, so your LTV is 80%. High LTVs above 80% require mortgage default insurance, usually from CMHC, Sagen, or Canada Guaranty. Lower LTVs below 80% signal lower lender risk and may qualify for better rates, but only if the mortgage still fits “insurable” criteria. The LTV category determines whether your mortgage is insured, insurable, or conventional, which directly impacts the rate class.

Mortgage Type: Insured, Insurable, or Conventional

Insured Mortgage
This is a high-ratio mortgage (LTV over 80%) that requires mortgage default insurance, usually purchased by the borrower.
Requirements:
* Property must be owner-occupied.
* Maximum purchase price is one million dollars.
* Maximum amortization is 25 years.
* Borrower must meet the stress test.

Because the mortgage is insured against default, the lender’s risk is minimal, allowing them to offer the lowest possible rates, often 0.10%–0.30% lower than conventional rates.

Insurable Mortgage
A low-ratio mortgage (LTV 80% or less) that qualifies for insurance but doesn’t require the borrower to pay for it. The lender may insure it at their own cost.
Requirements:
* Owner-occupied.
* Purchase price less than or equal to one million dollars.
* Maximum amortization of 25 years.

Insurable mortgages usually get mid-tier rates—slightly higher than insured but better than conventional—because lenders can securitize these loans, lowering their funding costs.

Conventional (Uninsurable) Mortgage
Any mortgage that does not qualify for mortgage insurance. Examples include properties over one million dollars, refinances, amortizations over 25 years, rental or investment properties, and unconventional properties such as acreages or mixed-use buildings. Because these loans cannot be insured or securitized, the lender bears full risk, resulting in higher interest rates, often 0.30%–0.80% above insured rates.

Credit Score and Borrower Profile

Your credit score and credit history reflect your borrowing habits, payment reliability, and overall financial health. A credit score above 680–700 generally qualifies for prime lender rates. Lower scores may lead to higher rates, more restrictive terms, or placement with alternative lenders. Lenders also review income stability, debt service ratios (GDS/TDS), and employment length.

Property Type and Use

The physical and functional characteristics of the property—detached house, condo, duplex, townhouse, or rental property—impact the rate.  Owner-occupied properties have lower risk. Investment or rental properties carry higher risk and therefore higher rates. Condos may have higher premiums depending on the strata’s financial health. Unique or rural properties have limited resale markets and therefore increased lender risk.

Amortization Period

This is the total time to fully pay off your mortgage.  Typically this is 25 or 30 years.
A 30-year amortization comes with a higher rate. Longer amortizations mean more interest over time and greater lender risk.

Rate Type and Term

Fixed rates are based on bond yields, while variable rates are tied to the lender’s prime rate. The term length also affects pricing; longer terms generally carry slightly higher rates because of greater interest rate risk for the lender.

Lender Type and Funding Source

Different lenders have different funding models.
Big banks offer stability but may not always have the lowest rates.
Monoline lenders such as RMG, MCAP, First National, or CMLS often offer lower rates on insured or insurable loans because they securitize them.
Credit unions may have more flexible qualification criteria but sometimes higher posted rates.

Location and Market Conditions

Properties in strong, liquid markets are easier to resell, which lowers lender risk and can mean better rates.  Remote or rural properties may face higher rates or stricter lending limits.  Overall economic trends—Bank of Canada policy, bond yields, and liquidity—also shape available rates.

A capable mortgage broker will easily and quickly be able to provide you the lenders and rates that best suit your circumstances, saving you a ton of time calling around to all the lenders asking a long list of questions.  Additionally, brokers have access to rate promotions not available directly to the public, so there’s even more benefit to utilizing their *free service.

*A consumer does not pay a fee for the advice or rates available to a mortgage broker.  Each lender pays the mortgage broker a commission, which is disclosed in our signing package prior to funding.

The Bank of Canada (BoC) reduced the overnight rate by 25 basis points this morning, bringing the policy rate down to 2.75%, within the neutral range of 2.25%—2.75%. Tariff tremors have already led to a decline in consumer confidence and spending, a weakening labour market, and a decline in business investment. Compound that with falling population growth, and you see why the Governing Council took the overnight rate down again even though they state that monetary policy cannot offset the impacts of a trade war.

Trade wars lead to higher prices and slower growth. The rise in prices causes consumers to tighten their belts, concerned about the impact of tariffs on their income and investments. Today, there is a 25% tariff on steel and aluminum exports to the US. This impacts Canada the most as it supplies roughly 80% of US aluminum demand. The EU introduced retaliatory tariffs on US goods in response. Canada added to its retaliation. Recent data suggest the US economy is slowing.

Monetary policy remains restrictive as the real overnight rate (2.75% minus the headline inflation rate) is 85 bps, up from the historical average of 60 bps. Five-year Government of Canada bond yields increased on the news to 2.65% compared to 4.05% in the US. The Federal Reserve is not expected to cut rates when it meets again this month.

Despite relatively strong GDP growth in Canada in the second half of last year, home sales and hiring began to slow in late January due to tariff threats, and more tariffs are yet to come. On March 20, China is expected to impose 100% retaliatory tariffs on Canadian canola oil, while pork and seafood will face a 25% levy. The Chinese tariffs are a push-back against Canada for imposing a 100% levy on electric cars from China and  25% on steel and aluminum.

On April 2, the US announced it will impose reciprocal tariffs on nations that have levied tariffs on US goods. President Trump has also said he is considering imposing retaliatory tariffs on Canadian dairy and lumber.

“We’re now facing a new crisis. The economic impact could be severe depending on the extent and duration of new US tariffs,” Macklem said in his prepared remarks.

Macklem called the uncertainty of the tariff dispute “pervasive” and said that it was “already causing harm.” Officials said the “continuously changing” US tariff threat was hitting consumers’ spending intentions and limiting businesses’ plans to hire and invest.

At the same time, Macklem said the bank “will proceed carefully with any further changes” to borrowing costs, and officials would “need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand.”

Bottom Line

These are uncertain times. The US is determined to impose worldwide tariffs, disproportionately hitting Canada, Mexico, and China, the US’s top trading partners. This is a misguided neo-Mercantilist policy. Mercantilism assumes that the global economic pie is fixed, so if one country prospers, another must fail. This idea of a zero-sum game was debunked in the 18th century by Adam Smith and others who showed that if countries have a competitive advantage in various products and services, all are better off by producing and trading those products with the rest of the world. It is not a zero-sum game. The economic pie grows with trade. This was the idea behind globalization and the USMCA free trade agreement.

Given Canada’s vulnerability to tariffs, the economy will suffer more than the US, which has a relatively closed economy (where exports are a small proportion of GDP). Prices will rise depending on the duration and size of the coming tariffs, but mitigating the inflation will be the weakness in economic activity. Stagflation, a buzz-word in the 1970s, is back in the lexicon.

We expect the BoC to continue cutting the policy rate in 25-bps increments until it reaches 2.25% this June, triggering a rebound in home sales. Layoffs and spending cuts will dampen sentiment, but lower interest rates will bring buyers off the sidelines.

Trump has imposed tariffs of 25% on goods coming from Mexico and Canada, 10% on Canadian energy, and an additional  10% on goods from China. He justified these actions by claiming they would force Mexico and Canada to address issues related to undocumented migration and drug trafficking. However, while precursor chemicals for fentanyl come from China and undocumented migrants enter through the southern border with Mexico, Canada accounts for only about 1% of both issues.

The Wall Street Journal, typically considered a conservative publication, criticized Trump, labelling this as the “dumbest trade war in history.” The Journal stated, “Mr. Trump sometimes sounds as if the US shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in or one that we should want to live in, as Mr. Trump may soon find out.”

This misguided tariff policy will cause untold damage to the global economy, including the US. Americans will suffer the impact of higher prices and shortages of key

products imported from Canada and Mexico. The various North American free trade agreements aimed to improve manufacturing efficiencies and meld the three economies to maximize productivity and the free flow of essential inputs into production. Canada is the number one supplier of steel and aluminum and there are no readily available substitutes for these crucial inputs. A plethora of products and construction activity use steel and aluminum. Aluminum is produced in Quebec where hydroelectricity is plentiful and cheap. US farmers depend on Canadian potash and auto parts, and Canada is the number one exporter of oil and gas to the US.

Consider the US auto industry, which operates as a North American entity due to the highly integrated supply chains across the three countries. In 2024, Canada supplied nearly 13% of US auto parts imports, while Mexico accounted for almost 42%. Industry experts note that a vehicle produced on the continent typically crosses borders multiple times as companies source components and add value most cost-effectively.

This integration benefits everyone involved. According to the Office of the US Trade Representative, the industry contributed more than $809 billion to the US economy in 2023, representing about 11.2% of total US manufacturing output and supporting 9.7 million direct and indirect US jobs. In 2022, the US exported $75.4 billion in vehicles and parts to Canada and Mexico. According to the American Automotive Policy Council, this figure rose 14% in 2023, reaching $86.2 billion.

Without this trade, American car makers would struggle to compete. Regional integration has become an industry-wide manufacturing strategy in Japan, Korea, and Europe. It leverages high-skilled and low-cost labour markets to source components, software, and assembly.

As a result, US industrial capacity in automobiles has grown alongside an increase in imported motor vehicles, engines, and parts. From 1995 to 2019, imports of these items rose by 169%, while US industrial capacity in the same categories increased by 71%. Thousands of well-paying auto jobs in states like Texas, Ohio, Illinois, and Michigan owe their competitiveness to this ecosystem, which relies heavily on suppliers in Mexico and Canada.

Tariffs will also cause mayhem in the cross-border trade of farm goods. In fiscal 2024, Mexican food exports comprised about 23% of US agricultural imports, while Canada supplied some 20%. Many top US growers have moved to Mexico because limits on legal immigration have made it hard to find workers in the US. Mexico now supplies 90% of avocados sold in the US.

Yesterday, the President’s tariff announcement led to an immediate sell-off in stock markets worldwide. Bonds, seen as a safer haven, rallied sharply, taking longer-term interest rates down sharply in anticipation of a meaningful slowdown in economic activity. The Canadian dollar sold off sharply, though it clawed back some of its losses overnight. WTI oil prices dropped 2% yesterday and continued to decline today.

Bottom Line
This is a lose-lose situation and President Trump underestimates the negative fallout of his actions at home and abroad. Retaliation will be swift. Americans will balk at the disruption of supply chains (think waiting for months for a new car) and the increase in the price of many products.

Legendary investor, Warren Buffet, called the tariffs an “act of war.”

Before the tariffs were imposed, we expected roughly 2% growth this year. Assuming the tariffs remain in place for a year, the Canadian economy will plunge into recession. We will likely see a few quarters of negative growth before growth gradually resumes.

Despite the inflation risk, the Bank of Canada will respond aggressively to minimize the meltdown in labour markets and the economy in general. When the Governing Council meets again on March 12, we expect another 25 bps cut in the overnight policy rate, bringing it down to 2.75%. Over the next year, we expect the Bank to continue to ease credit conditions, and a 2.0% overnight rate is likely.

The Canadian 5-year yield, a bellwether for setting fixed mortgage rates, has fallen to 2.51%, its lowest level in nearly three years. Lower interest rates are favorable for housing markets, although the inevitable rise in unemployment and drop in spending will mitigate this effect.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

As of March 1, 2025, mortgage rates in Canada have experienced notable shifts, influenced by recent economic developments and monetary policy adjustments.

Bank of Canada Rate Cuts

Between June 2024 and January 2025, the Bank of Canada implemented six consecutive rate cuts, totaling a reduction of 200 basis points. The most recent cut on January 29, 2025, lowered the benchmark interest rate by 0.25%, bringing it down to 3%. This series of cuts reflects the Bank’s response to declining inflation, which stood at 1.8% in December 2024, and aims to stimulate economic growth.

Impact on Variable-Rate Mortgages

These rate cuts have directly affected variable-rate mortgages and home equity lines of credit (HELOCs), as their interest rates are tied to lenders’ prime rates. Following the January rate cut, the prime rate at most lenders decreased to 5.2%. For borrowers, this translates to reduced borrowing costs and lower payments on some variable and adjustable loans.

Fixed Mortgage Rates

Fixed mortgage rates are primarily influenced by government bond yields rather than the Bank of Canada’s benchmark rate. As of March 1, 2025, three-year fixed mortgage rates are available from 4.4% at some brokerages, while five-year fixed rates are showing from 4.19%. These rates have inched down following a decline in bond yields, providing borrowers with more favorable terms.

Rates from Major Banks

Canada’s major banks offer competitive mortgage rates. For example, the Royal Bank of Canada (RBC) provides various fixed and variable rate options, with special offers for new mortgages and those switching to RBC. Similarly, TD Canada Trust offers a range of fixed and variable mortgage rates, with a 120-day rate hold for pre-approved mortgages, allowing borrowers to secure current rates even if interest rates rise during that period.

Considerations for Borrowers

When evaluating mortgage options, borrowers should consider:

• Amortization Period: Insurable mortgages in Canada have a maximum amortization period of 25 years.  However, with a down payment of at least 20%, borrowers can access mortgages with longer amortization periods, such as 30 years. While this may result in lower monthly payments, it could come with a slightly higher interest rate and more interest paid over the life of the loan.

• Pre-Approval: Obtaining a mortgage pre-approval can lock in current rates for a specified period (e.g., 90 to 120 days), providing protection against potential rate increases while shopping for a home.

• Fixed vs. Variable Rates: Fixed rates offer stability with consistent payments over the term, while variable rates may fluctuate with market conditions, potentially leading to lower costs if rates decrease further.

In summary, the recent monetary policy easing by the Bank of Canada has led to more favorable borrowing conditions for both variable and fixed-rate mortgages. The only way to know the best available options is to connect with your mortgage broker and get organized a few months before you need your financing.  In the world of home finance it truly pays to be organized and proactive.

“We have taken bold action to help more Canadians afford a downpayment, including with the Tax-Free First Home Savings Account, through which more than 750,000 Canadians have already started saving. Building on our action to help you afford a downpayment, we are now making the boldest mortgages reforms in decades to unlock homeownership for younger Canadians. We are increasing the insured mortgage cap to reflect home prices in more expensive cities, allowing homebuyers more time to pay off their mortgage, and helping homeowners switch lenders to find the lowest interest rate at renewal.”

– The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

“Everyone deserves a safe and affordable place to call home, and these mortgage measures will go a long way in helping Canadians looking to buy their first home.”

– The Honourable Sean Fraser, Minister of Housing, Infrastructure and Communities 

• The strengthened Canadian Mortgage Charter, announced in Budget 2024, sets out the expectations of financial institutions to ensure Canadians in mortgage hardship have access to tailored relief and to make it easier to buy a first home.
• Mortgage loan insurance allows Canadians to get a mortgage for up to 95 per cent of the purchase price of a home, and helps ensure they get a reasonable interest rate, even with a smaller down payment.
• The federal government’s housing plan—the most ambitious in Canadian history—will unlock nearly 4 million more homes to make housing more affordable for Canadians. To help more Canadians afford a downpayment, in recognition of the fact the size of a downpayment and the amount of time needed to save up for a downpayment are too large today, the federal government has:
  • Launched the Tax-Free First Home Savings Account, which allows Canadians to contribute up to $8,000 per year, and up to a lifetime limit of $40,000, towards their first downpayment. Tax-free in; tax-free out; and,
  • Enhanced the Home Buyers’ Plan limit from $35,000 to $60,000, in Budget 2024, to enable first-time homebuyers to use the tax benefits of Registered Retirement Savings Plan (RRSP) contributions to save up to $25,000 more for their downpayment. The Home Buyers’ Plan enables Canadians to withdraw from their RRSP to buy or build a home and can be combined with savings through the Tax-Free First Home Savings Account.

Success is where preparation and opportunity meet. Welcome to our Professional Services Concierge Program.……reduced fee, customer-focused services merging proactive planning and reliable professional advice for greater client success.

Sign up for free and receive personalized services saving you time and money with your mortgage.  It’s easy – provide me your mortgage statement, and I will diarize to contact you a few months in advance of your renewal to get you organized.  We will review your financial plan, check your credit score, pull together the required documents, research lender programs and rates and put together a short list of lenders to appeal to.  Our lender relationships and brokerage volume discounts will benefit you tremendously in securing the absolute best option at the best rate for your circumstance.  As a client of mine, you will have access to the below preferential services at reduced costs.  Myself and my colleague, Kirti Naslund are experienced business professionals but also business owners, real estate investors and good, honest, kind family oriented people who will ensure to make your experience as efficient and pleasant as can be.

We offer an efficient, seamless experience from start to end, and follow you beyond your mortgage funding to be there for you at every life change to come.  It’s our job to be there to help and support you, whenever you need us.  We look forward to meeting you!

Deciding whether to port your mortgage or get a new one depends on various factors such as your current mortgage terms, the terms of the new mortgage, your financial situation, your timeframe and your long-term plans. Here are some considerations to help you make your decision:

PORTING YOUR MORTGAGE

Interest rate: If your current mortgage has a lower interest rate than what is currently available, porting it might be beneficial, as you can keep the favorable rate.

Penalties: Check if there are any penalties or fees associated with porting your mortgage. Sometimes, the penalties can negate the benefits of porting.

Terms and conditions: Review the terms and conditions of your current mortgage to ensure they still align with your needs and financial situation.

Time frame:  Be clear about what information you need from your current lender to feel confident that you will be able to remove your subject to finance and feel secure.  Sometimes banks have administrative delays that prevent home-owners from getting adequate documentation within their timeframe.

GETTING A NEW MORTGAGE

Current market rates: If interest rates have decreased since you took out your current mortgage, getting a new mortgage might allow you to secure a lower rate, potentially saving you money over the long term.

Flexibility: A new mortgage may offer more flexible terms or features that better suit your current financial situation or future plans.  A mortgage broker can provide you OPTIONS to consider, ensuring you get the documentation you need when you need it.

Closing costs: Consider any closing costs associated with obtaining a new mortgage, as they can impact the overall cost-effectiveness of switching.  Using a mortgage broker allows you to lean on them to account for all costs involved and weigh the pros and cons of all options.

Financial situation: Consider your current financial situation, including your income, expenses, and overall financial goals. Choose the option that aligns best with your financial objectives and ability to manage mortgage payments.  It’s much more important that the payments be feasible for your circumstance than focusing on the interest rate.  Remember, your interest rate is temporary!

Long-term plans: Evaluate your long-term plans, such as how long you intend to stay in your current home and whether you anticipate any major life changes (such as job relocation or growing family needs) that could impact your housing situation.

Timeframe:  It is absolutely crucial to know your deadline dates.  Ensure your mortgage broker gets all those dates as soon as possible so they can put your file together, talk to lenders and present all options so you have some time to consider them and make an educated decision.  Also make sure you have accounted for your deposit funds and will be able to access them when needed, and that you’ve factored all closing costs into the transaction.

Porting your mortgage should be easy – but that’s not always the case!  In the last three months, I have had two clients come to me asking for help because they wanted to port their mortgages but weren’t feeling confident about the transaction and the support they were getting from their banks….  One client had just renewed his mortgage just under a year ago and specifically went with the lender he did because he was able to get a line of credit for a future deposit and he was assured he could port his mortgage when he was ready to upsize his home for his growing family.  Given the timeframes involved, both clients decided to switch to a new lender, even if the rate was slightly higher, because they could sleep at night knowing with certainty what the terms of the mortgage would be and that the financing would be in place when they needed it.

Ultimately, whether to port or switch lenders is a personal decision for you – – but it’s wise to ask for help from professionals so you KNOW with certainty that you are considering all feasible options for your circumstance and that you will absolutely have what you need when you need it.

Today’s StatsCanada Labour Force Survey for March is much weaker than expected. Employment fell by 2,200, and the employment rate declined for the sixth consecutive month to 61.4%.  Total hours worked in March were virtually unchanged but up 0.7% compared with 12 months earlier.

The details were similar to the headline: as full-time jobs dipped, total hours worked fell 0.3%, and only two provinces managed job growth. Among the type of worker, a 29k drop in self-employment was the primary source of weakness, while private sector jobs managed a decent 15k gain. The issue for the Bank of Canada is that wage gains are not softening even with a rising jobless rate. Average hourly wages actually nudged up to a 5.1% y/y pace, now more than two percentage points above headline inflation. With productivity barely moving, these 5% gains will feed into costs and threaten to keep inflation sticky.

The unemployment rate in Canada jumped to 6.1% in March of 2024 from 5.8% in the earlier month, the highest since October of 2021, and sharply above market expectations of 5.9%. The result aligned with the Bank of Canada’s rhetoric that higher interest rates have a more significant impact on the Canadian labour market, strengthening the argument for doves in the BoC’s Governing Council that a rate cut may be due by the second quarter. The unemployed population jumped by 60,000 to 1.260 million, with 65% searching for jobs for over one month. Unemployment rose to an over-seven-year high for the youth (12.6% vs 11.6% in February) and grew at a softer pace for the core-aged population (5.2% vs 5%).In March, fewer people were employed in accommodation and food services (-27,000; -2.4%), wholesale and retail trade (-23,000; -0.8%), and professional, scientific, and technical services (-20,000; -1.0%). Employment increased in four industries, led by health care and social assistance (+40,000; +1.5%).

Average hourly wages among employees rose 5.1% (+$1.69 to $34.81) year over year in March, following growth of 5.0% in February (not seasonally adjusted). This is still too high for the Bank of Canada’s comfort.

Bottom Line

The central bank meets again next Wednesday, and a rate cut is unlikely. I still expect rate cuts to begin at the following meeting in June. The Canadian economy, though resilient, will suffer from rising mortgage costs as many mortgages come under renewal over the next two years. Delinquency rates have already risen. Moreover, the planned reduction in temporary residents will also slow economic activity.

With the US jobs market still booming, it is likely the BoC will begin cutting rates before the Fed.