Are Mortgage Rates Really Going Up?
Lisa Manwaring • March 3, 2021
With all the economic uncertainty caused by a global pandemic, unprecedented unemployment levels, and government stimulus, mortgage rates have been on a steady decline for almost a year. In fact, we’ve hit some historic lows along the way.
Now, despite the Bank of Canada committing to keeping interest rates low into 2023, if you’ve been listening to the media in the last couple of weeks, you may have heard that interest rates are currently on the rise. But if the government is working to keep rates low, it doesn’t make sense for them to be going up? Well, the key here is to compare apples to apples.
The Bank of Canada controls the overnight rate target, impacting the prime rate, which impacts variable-rate mortgages. In contrast, fixed-rate mortgages get their cue from the bond market.
So while variable rates haven’t moved, the bond market has seen a lot of action, which has caused an increase in fixed-rate mortgages. Since February 5th, Canadian bond yields have surged by almost 0.60%, bringing us to record 12-month highs. In the last 2 weeks alone, we’ve seen rate increases of 0.10% to 0.30% on certain fixed mortgage terms.
So what does this mean for you?
Firstly, make sure you have perspective. There isn’t an emergency here, no need to act rashly. While we’ve seen an increase in fixed-rate mortgages by up to 0.30%, we’re still in a very low rate environment. Two years ago, fixed rates were over 3%, while you can still find terms under 2% today. That’s a huge drop.
Just because fixed-rate mortgages have gone up doesn’t mean you’ll qualify for any less of a mortgage. As the government uses a qualifying rate to stress test your mortgage, the actual contract rate isn’t used to qualify your mortgage.
So, if you’re looking to buy a property in the next little while, interest rates are still very low. It’s a great time to get a rate hold and pre-approval. Let’s talk! At the same time, if your existing mortgage is up for renewal soon or you’d like to refinance to access some equity, interest rates are still very low, historically speaking, we should evaluate all your options. Again, let’s talk!
Regardless of your situation, if you would like a little more clarity on how increasing rates impact you, or if you’d like to discuss mortgage financing, please reach out and contact me anytime. I would love to work with you!
RECENT POSTS
Can’t Find the Right Home After You’re Pre-Approved? There’s Another Option The best place to start any home purchase is with a mortgage pre-approval. It gives you clarity around your budget and lets you shop with confidence. But what happens when you’ve been pre-approved, you know where you want to live—and nothing suitable fits your price range? This is a common challenge, especially for first-time homebuyers. Before buyer fatigue sets in, it may be worth considering a different approach: buying a home that needs work and financing the renovations as part of your mortgage . What Is a Purchase Plus Improvements Mortgage? A purchase plus improvements program allows you to buy a property and include the cost of approved renovations directly in your mortgage. This can be a great solution if: You can’t find a move-in-ready home within budget You’re open to renovations You want to customize the home from the start It opens up more options and can help you get into a location or property that would otherwise be out of reach. How the Process Works While the idea is straightforward, the process itself is structured and requires planning. Here’s a high-level overview: Renovation quotes are required upfront You’ll need detailed quotes for the work you want completed before final mortgage approval. Renovations must add value The lender must be satisfied that the improvements will increase the property’s value accordingly. Funds are reimbursed, not advanced You pay for the renovations initially. Once the work is completed and verified by an appraiser, the lender reimburses you and adds the cost to your mortgage. With the right guidance, this process is very manageable—but it’s important to understand the steps before committing. Is This Program Right for You? Purchase plus improvements isn’t for everyone. Buying a home is already a big undertaking, and adding renovations can increase stress—especially if timelines, budgets, or contractors become challenging. That said, if you’re financially prepared and like the idea of shaping the home to fit your needs, this program can be an excellent way to get more value and flexibility from your purchase. Final Thoughts If you’re struggling to find the right home after being pre-approved, you may not need to lower your expectations—you may just need a different strategy. If you’d like to explore whether a purchase plus improvements mortgage makes sense for you, feel free to connect. I’d be happy to walk you through the process and outline exactly what this option would look like in your situation.
On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.
