How Does This Recent Bank of Canada Rate Change Impact Me?

Katherine Martin • January 22, 2015

The announcement yesterday from the Bank of Canada that it lowered the target overnight rate to 3/4 per cent has been called the most significant rate announcement in the last 10 years. So the obvious next questions are…

How does this rate change affect me? How does this rate change impact my ability to buy a new home? Do I have increased purchasing power now?

Well… let’s work this through.

Bank of Canada

The Bank of Canada sets what is called the “overnight rate” which has more to do with how banks borrow money among themselves than it does have a direct impact on consumers. However, according to the Bank of Canada website ,

“Changes in the target for the overnight rate influence other interest rates, such as those for consumer loans and mortgages.”

So basically the overnight rate can influence the prime lending rate, but it doesn’t have to… the banks decide that for themselves and subsequently for us.

The prime rate (currently 3%) is what Variable Rate Mortgages are based on. A typical variable rate mortgage will have a component plus or minus to prime. So if the prime rate is 3% and the component is -.5%, your contract rate would be 2.5%.  When the lender changes the prime rate, your rate goes up or down accordingly.

The confusion is a result of a lot of people believing the overnight rate is the prime rate. The over night rate is currently 0.75% whereas the prime rate is still 3%. As of right now, there has been no changes to mortgage rates as a result of the Bank of Canada announcement.

Will Rates Go Down?

Typically the prime lending rate does go down when the Bank of Canada lowers the overnight rate. However this is up to the banks to decide. The banks could decide not to pass along this decrease in their expenses to consumers and just hang on to the profitability. TD bank is already on record as saying they will not be lowering their prime rate in response to this latest Bank of Canada move.

“TD Bank said Thursday it had decided not to cut its prime rate, a decision that “was carefully considered and is based on a number of factors, with the Bank of Canada’s overnight rate only being one of them.” Royal Bank of Canada said it is “considering the impact” of the central bank’s rate cut, but is not changing its mortgage products at this time. Scotiabank told CBC News it had not yet made a decision on whether to cut its prime rate.”

“Our decision regarding our prime rate is impacted by factors beyond just the Bank of Canada’s overnight rate,” said Mohammed Nakhooda, a spokesman for TD Bank. ” Not only do we operate in a competitive environment, but our prime rate is influenced by the broader economic environment, and its impact on credit.”

It is still to be seen what all lenders will do, they are no doubt taking their time to consider all options (while they make more money in the short term).

Variable Rates

Even if all the lenders across the board do decide to lower their prime rate to 2.75%, this will have an impact on current variable rate holders and it will not increase the purchasing power of anyone purchasing a property and securing the mortgage with a variable rate. This is because:

To qualify for a variable rate mortgage, you qualify at the benchmark rate, instead of the contract rate.

The benchmark rate is currently 4.79%, so in order to qualify for the variable rate (which is currently in the mid to low 2% range), you have to be able to afford to qualify at the higher rate. These rules are in place so that when the variable rate mortgage renews in 5 years… there is no significant shock in payment increase if the lending landscape is drastically different.

Fixed Rates

Now, with the recent drop in oil prices, the Canadian dollar falling and the bond market taking a dive as a result of the Bank of Canada rate change, many are predicting that fixed rates will be going down as well.

Unlike the variable rate a 5 year fixed rate is qualified on the contract rate not the benchmark rate. So if the 5 year fixed rate does goes down it will actually increase the purchasing power of a homebuyer.

So, to answer the question directly, will this rate decrease impact the purchasing power of the average homebuyer. No it will not.

There will be less interest paid by variable rate holders but someone purchasing a property with a variable rate will not have any more purchasing power. While someone purchasing a property with a 5 year fixed rate will qualify for more, their rate is in no way tied to prime and they won’t see any savings from the lower rate (if it does go down).

It is good to note that the cost of borrowing money to purchase a home in Canada has never been this cheap. Any extra money paid towards principal will have a huge impact. It would seem that rather than try to use these low rates to purchase a more expensive house, the best plan of action would be to use these low rates to pay off your mortgage more quickly.

But as everyone’s situation is different, it’s hard to give general advice. I would love to talk with you about your situation and help you figure out the best mortgage product for you!

Katherine Martin


Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842


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Make the Most of Summer: Outdoor Project Ideas for Every Space

By Katherine Martin • July 17, 2025
Summer in Canada is short—but sweet. With warm weather and long evenings, it’s the perfect time to get outside and enjoy your outdoor space, no matter how big (or small) it is. Whether you have a tiny patio or a sprawling backyard, a few creative upgrades can go a long way toward turning your space into your personal summer oasis. Below are ideas for every type of outdoor space, from cozy balconies to large backyards! For Patio-Only Spaces Limited to a balcony or concrete patio? No problem! Small spaces can still offer big enjoyment. 1. Upgrade the Flooring Add interlocking tiles to give your concrete floor a more polished look—wood grain, grass panels, or composite styles are all popular, easy-to-install options. 2. Create an Outdoor Movie Zone Hang a pull-down screen or grab a portable stand, pair it with a mini projector, and voilà—your very own outdoor movie theatre under the stars! 3. Start an Herb Garden Railing planters are perfect for growing basil, mint, parsley, and more. Fresh herbs at your fingertips—and they smell amazing too! 4. Add Some Twinkle Wrap fairy lights around your railing or overhead beams to bring cozy vibes and nighttime charm. 5. Grill Like a Pro Maximize your BBQ season with a compact baby-que. Weber’s Q Series is a great option for small spaces without compromising grilling power. For Small Yards A little yard can still pack a lot of personality. Here are ways to make the most of every square foot: 1. Game Time! Add a mini putting green or an axe-throwing target (just be safe!) for quick bursts of backyard fun that don’t take up much space. 2. Warm Up Your Nights Add a heating lamp or portable fire bowl to keep your evenings cozy well into the fall. 3. Grow Your Own Produce Build or buy a raised garden box to grow tomatoes, cucumbers, lettuce, or other easy vegetables. Gardening is relaxing—and delicious! 4. DIY Bird Bath Make a pedestal bird bath using an old vase, a platter, and strong glue. You likely have everything you need already at home—and the local birds will thank you! For Big Yards If space isn’t an issue, the sky’s the limit! Here are some larger-scale projects to take your yard to the next level: 1. Build a Catio Yep, it’s a “cat patio”! Give your feline friends a safe way to enjoy the outdoors with a screened-in enclosure attached to your home. 2. Create a Permanent Fire Pit Use stones and a fire ring to build a beautiful, safe fire pit. You can even add airflow cutouts to reduce smoke—perfect for those marshmallow roasts! 3. Tile a Dining Area Install paving stones or tiles to define an outdoor dining space. Add a table, some string lights, and enjoy al fresco meals all summer long. Need More Inspiration? If none of these projects quite fit your vision, check out Home Depot’s DIY backyard ideas—complete with step-by-step instructions and material lists to help you bring your outdoor dreams to life. Soak It Up While It Lasts No matter the size of your space, there’s always something you can do to enhance your outdoor experience. So get out there, get creative, and make the most of these sunny summer days. See you back here in August—with more tips, tricks, and homeowner insights!

How Do You Port a Mortgage?

By Katherine Martin • July 16, 2025
Porting your mortgage is when you transfer the remainder of your current mortgage term, outstanding principal balance, and interest rate to a new property if you’re selling your existing home and buying a new one. Now, despite what some big banks would lead you to believe, porting your mortgage is not an easy process. It’s not a magic process that guarantees you will qualify to purchase a new property using the mortgage you had on a previous property. In addition to re-qualifying for the mortgage you already have, the lender will also assess the property you’re looking to purchase. Many moving parts come into play. You’re more likely to have significant setbacks throughout the process than you are to execute a flawless port. Here are some of the reasons: You may not qualify for the mortgage Let’s say you’re moving to a new city to take a new job. If you’re relying on porting your mortgage to buy a new property, you’ll have to substantiate your new income. If you’re on probation or changed professions, there’s a chance the lender will decline your application. Porting a mortgage is a lot like qualifying for a new mortgage, just with more conditions. The property you are buying has to be approved So let’s say that your income isn’t an issue and that you qualify for the mortgage. The subject property you want to purchase has to be approved as well. Just because the lender accepted your last property as collateral for the mortgage doesn’t mean the lender will accept the new property. The lender will require an appraisal and scrutinize the condition of the property you’re looking to buy. Property values are rarely the same Chances are, if you’re selling a property and buying a new one, there’ll be some price difference. When looking to port a mortgage, if the new property’s value is higher than your previous property, requiring a higher mortgage amount, you’ll most likely have to take a blended rate on the new money, which could increase your payment. If the property value is considerably less, you might incur a penalty to reduce the total mortgage amount. You still need a downpayment Porting a mortgage isn’t just a simple case of swapping one property for another while keeping the same mortgage. You’re still required to come up with a downpayment on the new property. You’ll most likely have to pay a penalty Most lenders will charge the total discharge penalty when you sell your property and take it from the sale proceeds. The penalty is then refunded when you execute the port and purchase the new property. So if you are relying on the proceeds of sale to come up with your downpayment, you might have to make other arrangements. Timelines rarely work out When assessing the housing market, It’s usually a buyer’s market or a seller’s market, not both at the same time. So although you may be able to sell your property overnight, you might not be able to find a suitable property to buy. Alternatively, you may be able to find many suitable properties to purchase while your house sits on the market with no showings. And, chances are, when you end up selling your property and find a new property to buy, the closing dates rarely match up perfectly. Different lenders have different port periods Understanding that different lenders have different port periods is where the fine print in the mortgage documents comes into play. Did you know that depending on the lender, the time you have to port your mortgage can range from one day to six months? So if it’s one day, your lawyer will have to close both the sale of your property and the purchase of your new property on the same day, or the port won’t work. Or, with a more extended port period, you run the risk of selling your house with the intention of porting the mortgage, only to not be able to find a suitable property to buy. So while the idea of porting your mortgage can seem like a good idea, and it might even make sense if you have a low rate that you want to carry over to a property of similar value, it’s always a good idea to get professional mortgage advice and look at all your options. While porting your mortgage is a nice feature to have because it provides you with options, please understand that it is not a guarantee that you’ll be able to swap out properties and keep making the same payments. There’s a lot to know. If you’re looking to sell your existing property and buy a new one, please connect anytime. It would be a pleasure to walk you through the process and help you consider all your options, including a port if that makes the most sense!
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