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What determines mortgage rates in Canada?

Rita Cousins Senior Mortgage Advisor • February 18, 2022

A generation ago, it wasn’t uncommon to see mortgage rates top double digits. But for a good portion of the last
decade, the rates have remained historically low. While it’s always hard to predict where mortgage rates will go in the
future, it is worth looking at their history and an explanation for what influences their fluctuation.

VARIABLE MORTGAGE RATES

Variable mortgage rates are determined by commercial banks’ prime rates, which are mainly swayed by the Bank of Canada’s key interest rate. That means an increase in the key interest rate almost automatically leads to a similar increase in variable mortgage rates. The Bank of Canada will typically raises its key interest rate in an effort to combat inflation.

FACTORS INFLUENCING BOND YIELDS

There are a number of factors that influence government bond yields. Since they are guaranteed by the Canadian government, these bonds are generally among the least perilous assets. Since a large amount of bonds are traded daily in the market, the supply and demand game in the bond market determines their price, and therefore their yield.

FIXED MORTGAGE RATES

Fixed rate mortgage loans are primarily influenced by the yieldon Canadian government bonds (bond yields) of corresponding maturity. The correlation between the fixed rates and the yield on five-year Canadian government bonds is almost a near match. This is the case because bond rates represent the benchmark for financial institutions’ cost
of funds.

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Bully Offers Are Back - What Buyers & Sellers Need to Know

By Andy Schildhorn • March 31, 2025
The Real Estate rules are changing again — and it’s a big one for anyone buying or selling in Langley or the Fraser Valley. As of March 17, 2025, bully offers are officially back in BC. Even if an offer date is set, Sellers can now accept early offers — with conditions. In this episode of Andy Talks Real Estate, I explain what’s changing, why it matters, and how to prepare. 📊 Key Takeaways: ✅ What is a bully offer — and why are they back? ✅ IDRPO vs DRPO: What the new rules mean for buyers & sellers ✅ How to adjust your strategy — especially in a slower market ✅ What must happen before a seller accepts an early offer ✅ Local perspective from 30+ years in the Langley & Fraser Valley market Whether you're thinking of selling this spring or trying to buy in a competitive area — this update could change your timing and negotiation power. 📅 Book a call: https://rly.forsale/Chat-with-Andy

Mark your calendar! - March 30 - Open House - Sun 2-4:00pm

By Andy Schildhorn • March 29, 2025
Charming English Garden Home at 23208 Francis, Fort Langley Charm and character define this stunning English garden home, essentially brand new while preserving its timeless appeal. For more details click here. Click here f or a video

Step Inside! March 29 - Open House - Saturday 2-4:00pm

By Andy Schildhorn • March 28, 2025
204 - 23255 Billy Brown | 1-Bedroom Condo in Bedford Landing Welcome to The Village in Bedford Landing! This bright spacious 1-bed, 1-bath + nook is perfect for first-time buyers, downsizers, or investors. Click here for more details . Click here a short video
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