MYTH Buster ~ Prime rate has dropped but fixed rates have not dropped as much!

Variable Rates
Variable-rate mortgages are directly tied to the Bank of Canada (BoC) policy rate. When the BoC adjusts its policy rate, financial institutions adjust their prime rates accordingly. Therefore, when the BoC policy rate changes, the variable mortgage rates will fluctuate in line with these adjustments.

Fixed Rates
Fixed-rate mortgages, on the other hand, are determined by bond yields. Specifically, they follow the trends in corresponding maturity bond yields. These bond yields are influenced by market expectations of future BoC policy rate changes.

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