The current variable rate for a mortgage is 5.45%. This rate is tied to the Prime rate.
Understanding Variable Mortgage Rates
A variable-rate mortgage features an interest rate that can fluctuate over time, typically moving in tandem with the lender's Prime rate. This means that as the Prime rate changes, your interest payments may also adjust, either increasing or decreasing.
Currently, the National Bank lists the following for their mortgage offerings:
| Mortgage Type | Reference Rate | Rate in Effect* |
|---|---|---|
| Variable-rate mortgage | Prime rate | 5.45% |
| Capped-rate mortgage | Prime rate Capped rate = 6.45% | 5.70% |
Please note: The Prime rate itself is currently 5.45%.
How Variable Rates Work
- Fluctuation: Unlike fixed-rate mortgages, variable rates are not locked in for the full term. They can go up or down based on market conditions and the Bank of Canada's key interest rate decisions, which influence the Prime rate.
- Payment Adjustments: Depending on the specific terms of your variable mortgage, your regular payment amount might change with the rate, or the proportion of your payment that goes towards principal versus interest might adjust, keeping your payment constant but changing the amortization period.
- Potential Savings: When interest rates are low or decline, a variable rate can offer significant savings compared to a fixed rate.
- Risk: Conversely, if interest rates rise, your payments or the interest portion of your payments will increase, which could impact your budget.
For more detailed information on mortgage rates, you can visit the National Bank's current rates page.
