0.25% Rate Increase by the Bank of Canada

In Stories by Vancouver Mortgage Broker

Bank Of Canada Rate Increases Rates, Increasing Mortgage Variable Rates By 0.25%


The Bank of Canada increased it’s overnight rate this morning by 0.25%.  This is the first increase since 2018 and will increase variable mortgage (and line of credit/loan) rates.  Prime rate is now 2.70% (up from 2.45%) with most lenders.

For those on existing variable rates mortgage providers will communicate with mortgage holders directly on how their mortgage is affected. (Mortgage holders with fixed rates will see no change to their mortgage with this announcement).

Most mortgage holders will see an increase in their monthly payment.

(Payment difference will depend on amortization remaining)
30 Year Amortization   $12.03/monthly
25 Year Amortization   $11.77/monthly
20 Year Amortization   $11.50/monthly

Home Equity Line Of Credit (HELOC) holders that are carrying a balance will also see an increase in their minimum monthly payment.


Some mortgage holders will see no change in their monthly payment, but a lengthening of their amortization (meaning slightly more of their monthly payment will go towards interest versus mortgage pay down).  Borrowers can contact their lender to adjust their mortgage payment if they would like amortization to remain the same.

Will Variable Rates Continue To Rise?

Some key notes from today’s Bank of Canada announcement:

  • Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate and the possibility of new variants remains a concern.
  • Economic growth in Canada was very strong in the fourth quarter.  
  • Poor harvests and higher transportation costs have pushed up food prices. The invasion of Ukraine is putting further upward pressure on prices for both energy and food-related commodities.
  • As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further.
  • The unprovoked invasion of Ukraine by Russia is a major new source of uncertainty.

Based on the tone of today’s announcement it appears we could be set for an additional 0.25% rate increase at it’s next meeting on April 13th however there is new uncertainty with the Ukraine/Russia conflict.

To read the complete Bank of Canada announcement click here:  Bank Of Canada Announcement

Fixed Mortgage Rates Stable

For the time being fixed mortgage rates are stable however we are keeping a watchful eye.

The Bank of Canada also said today:
“The Governing Council will also be considering when to end the reinvestment phase and allow its holdings of Government of Canada bonds to begin to shrink.”

With today’s overnight rate increase the Bank of Canada will look to reduce their activity in the bond market which has helped assist fixed rates to stay low.  This would increase pressure on fixed rates to rise.

Anyone that will be looking to obtain a new mortgage (or restructure their existing mortgage) should look into it sooner than later. 

Even those thinking of getting a new mortgage, but are unsure, can lock an interest rate in today for the next 4 months and decide.

Thoughts and blessings to all of the innocent in Ukraine and Russia.

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