On June 7, 2023, the Bank of Canada announced that the overnight target rate increased to 4.75 percent from 4.5 percent, increasing the prime lending rate to 6.95 percent. This rate update affected those with a variable rate mortgage or a line of credit, secured or unsecured.
Numerous lenders, including two big banks, continue to raise their fixed mortgage rates, and more hikes could be coming this summer.
Unlike variable rates that are determined by the Bank of Canada’s overnight target rate, fixed rates correlate with bond yields. Rising interest rates cause bond yields to rise, causing fixed rates to increase.
Housing market activity has recently increased due to a positive outlook driven by consumer confidence. A busy market also contributed to the Bank of Canada increasing the overnight target rate by 0.25 percent.
Starting a mortgage application right now will lock in today’s rate for 120 days, protecting you from these rate hikes. Apply here to ensure you get the best possible rate if you plan to buy a home this summer.