Are Interest Rates Going Up and Down at the Same Time? COVID-19

Marci • April 7, 2020

If you’re paying more attention to the Canadian economy due to COVID-19, and it seems like you’re getting mixed messages; that mortgage interest rates are going both up and down at the same time, you’re not that far off. There are a lot of moving parts, and to find clarity, we need to make sure we’re comparing apples to apples, and oranges to oranges.

Let’s begin by acknowledging that not all interest rates are the same. The term “interest rates” can mean a lot of different things in news story headlines.

The Government “overnight rate” is different from the “qualifying rate”, which is different from the banks “prime rate”, which is different from “variable rates”, which is different from the “discount on a variable rate” which is different from “fixed rates”.

Here’s a list of the different types of mortgage rates, a quick summary of what they are, the direction they’re going, and how they impact you.

Target for the Overnight Rate.

Also known as the policy rate, this is the rate that the Bank of Canada (The Government) controls. When the Bank of Canada changes the Target for the Overnight Rate, this change affects other interest rates in the economy.

Typically there are only eight days in the year for the Bank of Canada to announce if they will change the rate. However, given the recent COVID-19, the Bank of Canada has made special announcements.

The overnight rate was set with a target of 1.75% for a long time before the pandemic.

March 4th 2020, the rate was lowered to 1.25%. March 16th 2020, the rate was lowered to 0.75% in an emergency rate cut. March 27th 2020, the rate was lowered to 0.25% in a second emergency rate cut.

The overnight rate now sits at 0.25% with April 15th 2020, as the next scheduled announcement date.

By cutting interest rates, the government hopes to stimulate economic growth. Lower financing costs encourages borrowing and investing, which is what our government believes will get us through this pandemic.

Qualifying Rate

Also known as the Benchmark Qualifying Rate or the five year qualifying posted rate, this is another rate set by the government. If you’re getting an insured mortgage, the government wants to make sure you will be able to afford your mortgage at the end of your term (in case interest rates go up). So they make you qualify for your mortgage at a higher rate than you will actually be paying.

The government has recently dropped the qualifying rate from 5.19% to 5.04%. This decrease, like the drop in the overnight rate, is meant to help stimulate the economy. The average Canadian will qualify to borrow an additional $10,000 with this drop.

Banks Prime Rate

The banks prime lending rate isn’t the same as the overnight rate; however, the banks prime lending rate is impacted by the overnight rate. Each bank sets its own prime lending rate. When the Bank of Canada moves the overnight rate, typically the prime rate at each bank will follow.

Because of the emergency rate cut on March 27th, banks lowered their prime lending rate to 2.45%. Some banks moved immediately, while some made the change effective April 1st, which means the savings will be seen on May 1st, but they all did lower their prime rates.

The prime lending rate is used by banks to determine rates on floating mortgage products (like the variable rate), lines of credit, home equity lines of credit (HELOC), and some credit cards.

If you currently have a variable rate mortgage or a HELOC, a lower prime rate means that you are now paying less interest on your existing mortgage, this is a good thing.

Variable Rate Mortgage

A variable rate mortgage is a mortgage that fluctuates with the prime lending rate. Typically, the mortgage rate will change with the prime lending rate and includes a “component” or “discount” to the prime rate +/- a specified amount, such as Prime – 0.45%. The lender sets this component to prime.

So, if you have a variable rate mortgage at Prime -0.45%, the rate you’d be paying today (with a prime rate of 2.45%) is 2%.

This is where it gets a little confusing because while the government is trying to stimulate the economy by lowering the overnight rate, banks have followed by lowering their prime rate, but at the same time have increased the component to prime – by the same amount 0.5%.

Although there are immediate savings for existing variable rate mortgage holders, anyone looking to get a new variable rate mortgage will do so at a higher rate than a few weeks ago.

Fixed Rate Mortgage

As its name suggests, a fixed rate mortgage is where your mortgage rate stays the same throughout your term. Your rate isn’t tied to the prime lending rate but rather is unmoved by outside factors. With all the uncertainty in the Canadian economy, lenders have actually been increasing rates for new fixed rate mortgages.

So while the government is doing all they can to keep rates low, why are banks increasing fixed rate mortgages?

Well, banks are in the business of making money, and given that over 2 million Canadians have applied for some kind of assistance to get through COVID-19, the fear is that mortgage delinquency will go up considerably as the coronavirus financially impacts people.

Banks are increasing fixed rates to protect themselves against economic uncertainty.

So what does this mean for you? Well, as everyone’s financial situation is different, it’s impossible to give blanket advice that applies to everyone. But here is some general advice.

Existing Variable Rate Holders

You’re doing well. The recent drop in the banks prime rate to 2.45% has lowered the amount of interest you are paying on your mortgage. You have a discount to prime for the remainder of your term that isn’t currently available in the market. Your mortgage rate is one of the lowest in Canadian history.

As the next announcement by the government will be April 15th 2020, there is a chance your rate could go even lower.

If at this time, you’re considering locking your variable rate into a fixed rate, that would significantly increase the amount of interest you are paying. As fixed rates have increased over the last weeks, this isn’t a good option right now.

The reason you went variable in the first place is the reason you should stay variable at this point. With all the economic uncertainty, the prime rate won’t be going up anytime soon.

Existing Fixed Rate Mortgage Holders

Your fixed rate is set lower than the fixed rates currently being offered. If you break your term now, you will incur a higher penalty. So unless you must make a move, it would probably be best just to stay the course.

Hopefully, fixed rates will go down when the economic uncertainty winds down, and rates will be in a good spot when your term comes up for renewal.

Are you looking for a new mortgage?

The most important thing for you going forward is flexibility. Variable rates are still historically low, and although fixed rate mortgages have gone up over the last weeks, there are many great options, maybe a shorter term is a better fit for you?

The best place to start is to contact me directly so we can go over your financial situation and discuss the best plan for you to move ahead in these uncertain times.

So although it may appear that mortgage interest rates are going both up and down at the same time, understanding what is meant by “interest rates” is crucial. The government is lowering rates to stimulate the economy, while banks are trying to protect themselves against future losses by increasing rates while they can.

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What Is a Cashback Mortgage and How Does It Work?

By Marci Deane • January 7, 2026
Cashback Mortgages: Are They Worth It? Here’s What You Need to Know If you’ve been exploring mortgage options and come across the term cashback mortgage , you might be wondering what exactly it means—and whether it’s a smart move. Let’s break it down in simple terms. What Is a Cashback Mortgage? A cashback mortgage is just like a regular mortgage—but with one extra feature: you receive a lump sum of cash when the mortgage closes . This cash is typically: A fixed amount , or A percentage of the total mortgage , usually between 1% and 7% , depending on your mortgage term and lender. The money is tax-free and paid directly to you on closing day. What Can You Use the Cashback For? There are no restrictions on how you use the funds. Here are some common uses: Covering closing costs Buying new furniture Renovations or home upgrades Paying off high-interest debt Boosting your cashflow during a tight transition Whether it’s to help you settle in or catch up financially, cashback can offer a helpful buffer— but it comes at a cost . The True Cost of a Cashback Mortgage Here’s the part many people overlook: cashback mortgages come with higher interest rates than standard mortgages. Why? Because the lender is essentially advancing you a small loan upfront—and they’re going to make that money back (and then some) through your mortgage payments. So while the upfront cash feels like a bonus, you’ll pay more in interest over time to have that convenience. Breaking Down the Numbers It’s hard to give a blanket answer about how much more you’ll pay since it depends on: Your interest rate The cashback amount The mortgage term Your payment schedule This is why it’s important to run the numbers with a mortgage professional who can help you compare this option with others based on your personal financial situation. Are You Eligible for a Cashback Mortgage? Not everyone qualifies. Cashback mortgages generally come with stricter requirements . Lenders often want to see: Excellent credit history Strong, stable income Low debt-to-income ratio If your mortgage file includes anything “outside the box”—like being self-employed or recently changing jobs—qualifying for a cashback mortgage might be tough. What If You Need to Break the Mortgage? This is one of the biggest risks with cashback mortgages. If your circumstances change and you need to break your mortgage early, you could be on the hook for: Paying back some or all of the cashback you received, and A prepayment penalty (typically the interest rate differential or 3 months’ interest—whichever is higher) That can be a very expensive combination. So if there’s even a chance you might need to sell, refinance, or move before your term is up, a cashback mortgage might not be the best fit. Should You Consider a Cashback Mortgage? Maybe—but only with eyes wide open. Cashback mortgages can be helpful in the right scenario, but they’re not free money. They’re a lending tool that benefits the lender , and the key is knowing exactly what you’re agreeing to. Final Thoughts: Talk to an Expert First Choosing the right mortgage isn’t just about the lowest rate or the biggest perk—it’s about making a choice that fits your whole financial picture. If you’re considering a cashback mortgage, or just want to explore all your options, let’s talk. As an independent mortgage professional , I can help you weigh the pros and cons of various products, so you can make a confident, informed decision. Have questions? I’d be happy to help—reach out anytime.

Getting a Mortgage Shouldn’t Be Stressful—We Can Help

By Marci Deane • December 31, 2025
Buying a Home? Follow These 6 Key Steps for a Smooth Experience Buying a home is likely one of the biggest financial decisions you’ll ever make. It’s exciting—but it can also be overwhelming, especially when it comes to understanding how mortgage financing works. To help make the process smoother (and far less stressful), here are six essential steps every homebuyer should follow: 1. Start With a Mortgage Professional—Not MLS It’s tempting to start your home search by scrolling through listings and booking showings—but the real first step should be speaking with an independent mortgage professional . Unlike a bank that offers only one set of products, an independent mortgage expert has access to multiple lenders and options . That means better advice, better rates, and a better chance of finding a mortgage that truly fits your needs. 2. Build a Personalized Mortgage Plan Unless you’re buying your home with cash, you’ll need a solid financing strategy. That means: Reviewing your credit score Running affordability calculations Exploring different mortgage types, terms, and features Understanding down payments and closing costs The sooner you start planning, the more confident you’ll feel. Don’t wait until you’ve found the “perfect” property— get ahead of the process now . 3. Figure Out What You Can Actually Afford What a lender says you can borrow doesn’t always match what you can comfortably pay each month. Take a close look at your budget, lifestyle, and spending habits. Think about how your mortgage payments, property taxes, utilities, and other costs will fit into your everyday cash flow. Avoid the stress of being house-poor by knowing your real-life affordability , not just your paper pre-approval. 4. Get Pre-Approved the Right Way A true mortgage pre-approval isn’t just entering numbers into an online calculator. It means: Completing a mortgage application Submitting all your required documentation Having a mortgage professional fully assess your file When you’re officially pre-approved, you’ll shop for homes with confidence , knowing what you qualify for and that you’re financially ready. 5. Submit Your Documents Promptly and Stay Flexible Once you find a property and your offer is accepted, time is of the essence. That’s when all the upfront work you’ve done really pays off. Be ready to: Provide additional documentation if requested Respond to your mortgage professional quickly Stay flexible and proactive throughout the approval process Your lender needs to verify everything before finalizing the loan, so staying organized is key. 6. Don’t Make Big Financial Changes Before Closing Once you’ve secured financing and waived your conditions, freeze your finances until after you get the keys. Seriously—don’t: Change jobs Apply for new credit Take out a loan Make a large withdrawal Even small changes can throw off your approval. Keep everything status quo until you officially take possession. Recap: 6 Steps to a Smooth Home Purchase Connect with an independent mortgage professional Create a mortgage plan early Know what you can afford (not just what you qualify for) Get fully pre-approved Stay on top of documentation Avoid major financial changes before possession Ready to Buy with Confidence? If you’re thinking about buying a home—or just want to know what’s possible—let’s talk. I’ll help you map out a personalized plan that makes your homebuying journey feel simple, strategic, and stress-free. Reach out anytime. I’d love to help you get started.

Get Unbiased Advice: Work with an Independent Mortgage Pro

By Marci Deane • December 24, 2025
Why Work With an Independent Mortgage Professional? If you’re in the market for a mortgage, here’s the most important thing to know: Working with an independent mortgage professional can save you money and provide better options than dealing directly with a single bank. If that’s all you read—great! But if you’d like to understand why that statement is true, keep reading. The Best Mortgage Isn’t Just About the Lowest Rate It’s easy to fall for slick marketing that promotes ultra-low mortgage rates. But the lowest rate doesn’t always mean the lowest cost . The best mortgage is the one that costs you the least amount of money over time —not just the one with the flashiest headline rate. Things like: Prepayment penalties Portability Flexibility to refinance Amortization structure Fixed vs. variable terms …can all affect the true cost of your mortgage. An independent mortgage professional looks beyond the rate. They’ll help you find a product that fits your unique financial situation , long-term goals, and lifestyle—so you’re not hit with expensive surprises down the road. Save Time (and Your Sanity) Applying for a mortgage can be complicated. Every lender has different rules, documents, and policies—and trying to navigate them all on your own can be time-consuming and frustrating. When you work with an independent mortgage professional: You fill out one application They shop that application across multiple lenders You get expert advice tailored to your needs This means less paperwork , less stress , and more confidence in your options. Get Unbiased Advice That Puts You First Bank specialists work for the bank. Their job is to sell you that bank’s mortgage products—whether or not it’s the best deal for you. Independent mortgage professionals work for you. They’re provincially licensed, and their job is to help you: Compare multiple lenders Understand the fine print Make informed, long-term financial decisions And the best part? Their services are typically free to you . Mortgage professionals are paid a standardized fee by the lender when a mortgage is placed—so you get expert guidance without any out-of-pocket cost. Access More Mortgage Options When you go to your bank, you’re limited to that bank’s mortgage products. When you go to an independent mortgage professional, you get access to: Major banks Credit unions Monoline lenders (who only offer mortgages) Alternative and private lenders (if needed) That’s far more choice , and a much better chance of finding a mortgage that truly fits your needs and goals. The Bottom Line If you want to: Save money over the life of your mortgage Save time by avoiding unnecessary back-and-forth Access more lenders and products Get honest, client-first advice …then working with an independent mortgage professional is one of the smartest decisions you can make. Let’s Make a Plan That Works for You If you're ready to talk about mortgage financing—or just want to explore your options—I'm here to help. Let's connect and put together a strategy that makes sense for your goals and your future. Reach out anytime. I’d be happy to help.