24 Mar

Why Do Rates Fluctuate?

Edmonton Mortgage Broker

Posted by: Vaughn Leroux

When house hunting or looking for a mortgage, many people look to get the lowest interest rate possible. Your interest rate will depend on your credit history and financial situation, so not everyone gets the same rates. If you ever had a variable rate mortgage, you’ll know that rates can often change in the market. But what causes rates to fluctuate like this? Our Edmonton mortgage broker team is here to tell you.

Growth in the Economy

The economy is quite sensitive and can be negatively impacted by what is going on in the world, such as natural disasters, war, or a worldwide pandemic, like we have been dealing with since last year. When our economy has been growing at a healthy rate, there is a rise in the demand for money. This causes interest rates to rise. When there is an unhealthy slowing of the economy, we see rates falling. As a result, we see a rise in inflation. When inflation hits a growing economy, it can cause prices to rise and spending power to drop. As a result, lenders will protect themselves by raising interest rates. 

How This Impacts Fixed-Rate Mortgages 

For fixed-rate mortgages in Canada, bond yields are what impact things. A fixed-rate mortgage will mirror government bond yields that have the same term. Fixed-rate mortgages tend to lock in a rate for a specified time, such as 5 years. When it comes to the market, bond yields are seen as safer than stocks. Bond yields are how much you will recoup as an investor when the bond matures. When we see a rise in bond prices, we also see a drop in bond yields. Having bond prices drop will cause bond yields to rise. Fixed-rates will follow the rise and drop in bond yields.

Fixed-Rate Mortgages and the Stock Market

The stock market also has an impact on rate fluctuation. When the stock market is healthy, we see a decline in bonds and a rise in fixed interest rates. This occurs because investors will see a better investment return in stocks, so the demand for bonds drops along with their prices. We also see a rise in bond yields and fixed interest rates dropping.

How This Impacts Variable Mortgage Rates

It’s a different story with variable mortgage rates. These rates are determined by the overnight lending rate target and the Bank of Canada. We see variable-rates fluctuation monthly based on what the prime rate of mortgage lenders is.

Variable Rate Mortgages and Overnight Rate 

The overnight rate impacts funds that are short-term, along with their costs of borrowing and lending. The overnight rate also has an impact on the Prime Rate. When we see a rise in the prime rate, we see this rise mirrored in variable-rate mortgages, which affects your monthly repayments. Larger banks rely on the overnight rate when it comes to the daily borrowing and lending of funds amongst themselves.

For example, let’s say that the overnight rate is 0.5% and the major bank’s prime rate is at 2.50%. In order to determine the variable rate, we would need to subtract the overnight rate from the prime rate, giving us a 2.00% variable-rate. We then have the Bank of Canada raise the overnight rate by 0.25% to 0.75%. This will cause the larger banks to raise their prime rate by 0.25% to 2.75%, giving us a variable rate rise to 2.25%.

Now, let’s apply those rates to a mortgage loan of $250,000 with a 25-year term. The 0.5% rise causes a rise in your repayments of $30.40. 

This is why we can see fluctuation in interest rates, which is impacted by bonds, bank rates, and the overall health of the economy. If you want to take advantage of the current low rates, give our Edmonton mortgage broker team a call today.


12 Mar

Budgeting Apps for Down Payment Savings

Edmonton Mortgage Broker

Posted by: Vaughn Leroux

A lot of home buyers find it hard to save for that all-important down payment on a home. It’s something that you should start doing a couple of years before you start house hunting. It also requires you to set out a budget to follow. Thankfully, there are a number of tools and apps for budgeting that you can find online. Our Edmonton mortgage broker team is here to explain which apps are best for you.

Overview of Budgeting Apps

A budgeting app can be a really powerful tool that helps you save, improve and monitor your finances. Many of these can be customized for your preferences and needs. Most financial institutions in Canada offer their own spending apps and mortgage calculators, which can be used in conjunction with other budgeting apps for your smartphone. From planning for your down payment to making sure you don’t overspend, here are some examples of the apps that you can use in 2021.

Mint Budgeting App 

This is a free app that is user friendly and can link up with your bank account. The main feature of this app is to track your budget and expenses. It lets you set up a savings goal, will alert you to bills that are due, and warns you if you are going over your budget limit.

You Need A Budget

Also referred to as YNAB, this is another popular app to help you save. You can set financial goals, track your spending, and monitor bank accounts. It’s a user-friendly app that offers tips for saving and budgeting that will help you to live within your means so that you can save or get yourself out of debt. It’s good for beginners because it teaches you how to make each dollar count, develops your awareness of what you spend when you spend it, shows you how to create a rainy day fund, and overall money mindfulness. Keep in mind that the app isn’t free. You have a 24 day trial period and then pay $6.99 a month.


The Wally app offers a savings slider tool that can be really helpful when it comes to tracking your money. It allows you to set up a percentage of your income to set aside for savings. It also offers the standard tools for tracking your budget and learning how to use your money better.


Mylo is another app that connects to your bank and will help you save by rounding up your debit and credit purchases and depositing the extra into an account. You are able to set customized goals or choose one of the three basic goals the app offers. It also offers you cashback perks if you buy from one of its partnered businesses.

Some may feel more comfortable using the mortgage and budgeting tools offered by their lenders. These can work alongside savings apps because they let you set up your budget and allow you to use different scenarios to see how much you could be spending or saving each month. For example, choosing to refinance your mortgage can help you lower your monthly repayments and get you a better interest rate. The extra funds that you save can be implemented into the budgeting app on your smartphone and put into a savings account for a down payment on your next home. There are many ways to start saving for your down payment and the tool that is right for you will depend on your own needs. They definitely can help you get your budget under control and keep track of where your money goes. Just being more aware of your daily spending can make a huge difference.

If you have questions about budgeting apps and tools to help you save, give our Edmonton mortgage broker team a call today!