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Borrowing Costs

What it costs to borrow in Canada: prime, mortgage rates, and government bond yields

What it costs to borrow in Canada: the rates households and the government pay. These move with the Bank of Canada’s policy rate, which it raises to cool inflation and lowers to support the economy (see Cost of Living for the policy rate against inflation), and they set the price of mortgages and other credit.

Prime and mortgage rates

What households pay to borrow. The prime rate moves with the Bank of Canada’s policy rate and underpins variable-rate mortgages and lines of credit; the conventional 5-year mortgage rate is the posted benchmark for the most common fixed term, which tracks the 5-year government bond yield.

Government bond yields

What investors charge to lend to the Government of Canada at each term: the benchmark the fixed borrowing costs above are priced from. The 2-, 3-, and 5-year yields map onto the common fixed-mortgage terms; the 10-year and long-term reflect longer-horizon expectations. Use the dropdown to switch term.

Policy rate, bond yield, and mortgage rate together

The two rates above and the policy rate on one axis: the Bank of Canada’s target for the overnight rate, the 5-year Government of Canada bond yield, and the posted conventional 5-year mortgage rate. Prime and variable-rate borrowing follow the policy rate; fixed mortgage rates are priced from the bond yield, which moves daily with expectations of where the policy rate is heading.

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