Understand what moved
A policy decision, a lender’s prime rate and your contract rate play different roles. Start with the part that affects your own account.
The Bank of Canada policy rate
The Bank of Canada's policy interest rate, also known as the target for the overnight rate, is the interest rate that the Bank of Canada uses to influence the economy and keep inflation low and stable. It influences financing conditions; it does not set every retail rate.
Variable mortgage and HELOC rates
Many variable-rate contracts are expressed as a lender’s prime rate plus or minus a contractual adjustment. Check which prime rate your contract follows, how often interest is calculated and when a change takes effect. A fixed-payment variable mortgage may change its interest/principal split before the required payment changes.
- Find the actual rate and lender-prime adjustment in your agreement.
- Ask whether payments adjust, the amortization changes, or trigger provisions apply.
- Keep a dated lender notice with the contract; a policy announcement is not that notice.
Fixed mortgage rates
A fixed rate normally remains the same during its contract term. New fixed offers can change with funding conditions, competition and the features of the offer. Adding a constant spread to the Bank of Canada rate does not establish an available five-year fixed offer.
Savings, GICs and credit
A deposit institution sets its own savings and GIC offers. Promotional periods, eligibility, withdrawal terms and balance tiers can matter as much as the headline percentage. An effective annual yield and a nominal annual interest rate use different compounding conventions.
Making a decision
Compare written terms on the same date and for the same scenario. Note fees, prepayment options, early-exit costs, portability and what happens at renewal. Use a calculation to ask better questions; a model cannot determine what a lender will approve.