In Canada, mortgage rates are set by the major financial institutions, in a "follow-the-leader" manner, with one of them, usually a major bank, taking the "leader" role. All major financial institutions earn a large part of their income on the "spread", which is the difference between loan/ mortgage rates they charge to borrowers and the rates they pay to depositors/ investors for an equivalent term.

 In this section, the basic "cause and effect" factors behind these mortgage rate movements are discussed in greater depth.
 

How the Bond Market Affects Mortgage Rates

The bond market, which is a part of the worldwide "wholesale money market" is the great leveler. It is affected by monetary and fiscal policies and economic and political changes in all the major nations of the world.

How Market Changes can Affect Mortgage Decisions

Financial markets can vary greatly, and individual mortgage borrowers' most effective strategies can vary along with these conditions.

How the Lenders Manage Mortgage Rates and Products

How the Lenders manage their portfolio of mortgages and deposits while continuing to maintain, or increase their share of a growing mortgage market, is unique to Canada due to the nature of our financial services industry.