The Bank of Canada and mortgage rates

The Bank of Canada can indirectly influence mortgage rates through its monetary policy decisions. The central bank's primary tool for influencing interest rates is the target for the overnight lending rate, also known as the policy rate or the key interest rate.
When the Bank of Canada adjusts the target for the overnight lending rate, it affects the cost at which banks and other financial institutions can borrow money from the central bank. Changes in the policy rate can influence the overall interest rate environment in the economy, including mortgage rates.

When the Bank of Canada lowers the policy rate, it incentivizes banks to lower their own lending rates to stimulate borrowing and economic activity. This, in turn, can lead to lower mortgage rates. Conversely, when the central bank raises the policy rate, it can cause banks to increase their lending rates, which can result in higher mortgage rates.
However, it's important to note that mortgage rates are also influenced by other factors such as the overall state of the economy, inflation expectations, creditworthiness of borrowers, and competition among lenders. Market forces and the supply and demand dynamics of the mortgage market can also impact mortgage rates.
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Ultimately, while the Bank of Canada's monetary policy decisions can have an impact on mortgage rates, the final determination of mortgage rates is influenced by a variety of factors and is set by individual lenders based on their risk assessments and market conditions.

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