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Will Variable rates increase as Bank Prime drops?

where to invest  Here’s a warning to all….   Watch out for the BANKS to increase their Variable rate mortgage pricing.  History tells us that when the Bank of Canada lowers their Target Rate, and the Bank Prime falls, Variable rate mortgage pricing increases.

If you have a mortgage coming due in the next 4 months, speak with a mortgage broker to get you a rate hold immediately!

Today, you can get Prime less 0.65% on a Variable rate mortgage.  That’s 2.85% – 0.60% = 2.20%. THIS PRICE COULD DISAPPEAR!  2.20% is a great rate!   No one would argue that.  The BANKS are counting on you to be content with that 2.20% rate. On March 4th, the Bank of Canada meets again to set the Target Rate.  And all indications point to another 0.25% reduction.  

We should expect the Bank Prime to drop to 2.60%.   That would mean Variable rate mortgage holders would have an interest rate below 2.00%!   Right?… well, maybe not for long… and only for existing contracts…


The BANKS always find a way to justify charging clients more.   Last month, then the Bank of Canada cut Target Rate by 0.25%, it was expected that the BIG SIX BANKS would follow and drop Bank Prime by the same 0.25%…. just as it’s been happening for decades.  But the BIG SIX BANKS paused for a week before agreeing to lower BANK PRIME…. but not by 0.25%, but only by 0.15%….  Can you GREED?

So as we approach the March 4th meeting date, don’t be surprised to see Variable rate pricing increase to Prime less 0.50% or less 0.40%…  If Bank Prime falls to 2.60%, then you might not see a 1.95% rate for new mortgages… you might only see 2.20% again…After all, the BANKS are counting on you, the consumer, to just look at the face rate and be happy.

Ah, yes…. The Bank is my friend…  guess again..

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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