The cost of variable-rate mortgages rose in line with the Bank of Canada\u2019s rate hike this week, but variable-rate increases could outpace central bank hikes in the future for new loans and renewals.<\/p>\n
The lowest advertised rate for a five-year variable mortgage on Ratehub.ca<\/a> had climbed to 3.66 per cent as of Thursday afternoon from 3.41 per cent last week. The increase was the same as the Bank of Canada\u2019s 25-basis-point hike on Wednesday. (There are 100 basis points in a single percentage point.)<\/p>\n However, Victor Tran, an Ontario-based mortgage broker, said advertised variable rates could climb at a faster pace than the Bank of Canada\u2019s headline interest rate in coming months, when the central bank is expected to roll out a few more hikes. That\u2019s because lenders tend to reduce the discount they offer on their prime rate as rates increase. (A bank\u2019s prime rate is their baseline annual interest rate. Variable mortgages tend to be discounted from a bank\u2019s prime rate.)<\/p>\n The last time this happened was in 2022, when both fixed rates and variable rates were climbing rapidly. Lenders started adjusting their variable rate discounts to reduce the gap with their fixed rates.<\/p>\n BoC hikes rate to 2.5%, suggests more may be needed to contain oil-price shock<\/a><\/p>\n