“What is the lowest mortgage rate you can get me right now?” Grab your coffee and settle in – this answer is loaded – and I won’t even tell you a number.

First off, I do want to say that there is more to a mortgage than just rates – although they play a big factor. When working with a mortgage agent, we have access to multiple lenders, rates and products that could offer the right mix of options that make you comfortable with the decision to buy, refinance or renew.

There are 2 types of mortgage rates and each is controlled by different factors.

Fixed-rate – This means the interest you pay towards your mortgage won’t change through the term of your mortgage. These rates are controlled by the mortgage bond yield. This is sort of like the stock market. When the bond market is good, fixed rates are lower but when it is higher – so are rates. The past year has seen an increase in fixed rates that have hovered around the 4-5% area. One thing I always note here is that the super low rates of 1-2% during COVID were not normal and we are unlikely to see rates that low anytime soon.

Variable rate – Floating rate or adjustable rate mortgage, this type of mortgage has an interest rate that fluctuates with the prime lending rate. One potential benefit of variable rate mortgages is lower interest rates, but in return, mortgagors (homeowners) take on risk: if the prime rate goes up, a larger chunk of your mortgage payment will go toward the interest, not paying down your principal. The result: your mortgage could take longer to pay off and cost you more in interest. In the past year, the Bank of Canada has raised the prime lending rate 8 times. No one has a crystal ball, but it is expected that the Bank of Canada will not increase their lending rate again but that it will remain steady until the end of 2023.

For both fixed and variable rates, it is impossible to predict the future exactly. But if you get a mortgage now, and rates decrease over your term, there are options like re-negotiating or switching lenders to get a lower rate. There are penalties to break a mortgage but that fee can often be less than the monthly payment and interest savings over time. I’ll watch the rates and let you know when this option could be beneficial.