What factors affect mortgage rates in Canada?

There are several different factors that affect mortgage rates in Canada. A few of the major ones on the macro-economic level include the money supply and the overnight lending rate set by the Bank of Canada. For example, a high level of deposits across the country leads to abundant mortgage lending at low rates because there is a great supply of money to lend. The overnight lending rate, because it the basis of the prime rates that banks use to determine variable interest rates, also has a huge impact on mortgage interest rates.

On an individual level, the main factor influencing mortgage rates is the creditworthiness of the borrower. Individuals with bad credit, for example, must pay much higher mortgage rates than those with good credit.

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