Quote:
Originally Posted by opendoor
They're not. Variable rate mortgages generally move in lockstep with the BoC rate both up and down. Fixed rates move with bond yields, again both up and down. Two different types of mortgages with each having their own thing driving the rates.
But bond yields are primarily based on the market's prediction of future rate trajectories, so fixed rates will normally move before variables do. So they went up significantly before the first interest rate increase in 2022 and started dropping 6-7 months before the first rate cut.
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Except 10 years ago when the BoC made two 25bps cuts from 1% to 0.5% and the major banks only made 15bps cuts. Yet when rates raised back up to 1% and higher the banks made sure to match the full increases. Bank prime was always +2% above BoC prime, now it's +2.2%.
Yes, I'm still bitter.