Understanding Mortgage Rates and Choosing a Good Mortgage Broker

Current Interest Rates^*

5 Yr Fixed (insured)	4.09%	–	3 Yr Fixed (insured)	3.69%	–
5 Yr Fixed	4.34%	–	3 Yr Fixed	3.99%	–
5 Yr Variable (insured)	4.20%	–	2 Yr Fixed (insured)	4.59%	–
5 Yr Variable	4.35%	–	2 Yr Fixed	4.69%	–
4 Yr Fixed (insured)	4.24%	–	1 Yr Fixed (insured)	4.94%	–
4 Yr Fixed	4.39%	–	1 Yr Fixed	4.99%	–
No changes since last week. Please note the 3-year fixed rate special!! *It’s possible to get slightly lower insured rates on the variable and 5-year fixed.

^*Current interest rates as of Sept 10, 2025. Rates subject to change.

What Makes a Good Mortgage Broker?

A good mortgage broker goes beyond great communication and rapport skills. They must understand mortgage planning and interest rates to provide tailored advice.

Predicting Rates Is Not the Point…

Every fixed mortgage term—whether one year or five years—is priced off instruments (swaps, bonds, and GICs) that reflect expectations for the yield curve. In simpler terms, fixed mortgages are indirectly tied to where traders predict the Bank of Canada’s overnight rate is headed.

• The 1-year fixed is priced off short-term funds that move with the average expected overnight rate over the next year.
• The 2-year fixed is priced off short-term funds that move with the average expected overnight rate over the next two years.
• The 3-year fixed is priced off medium-term funds that move with the average expected overnight rate over the next three years.
• And so on…

These expectations form the foundation for pricing any mortgage term. In other words, the price someone pays for a mortgage depends on where the Bank of Canada’s policy rate (prime rate) is expected to go.

Variable rates work differently. They are priced based on the current Bank of Canada overnight rate, reflecting today’s rates in real time. Unlike fixed terms, which lock in future expectations when you sign, variable rates adjust whenever the Bank of Canada changes its rate.

Here’s the Bank of Canada forward curve for expectations of where the Prime Rate will go over the next 5 years.

^*Source: MLN

Why Is This Important?

If rates are expected to increase, what should you do about your mortgage? The key is understanding:

1. Whether a higher rate is justified.
2. Whether a lower rate and shorter term is a trap.

Borrowers should consider:

1. What the market charges, by term, to insure against future rate increases.
2. Whether the “premium” on each term is a bargain or a rip-off.

Sometimes, an “overpriced” term might still be the right fit. For example:

• A higher-rate one-year fixed may suit a borrower expecting a large lump sum in 12 months.
• A pricier one-year fixed may be ideal for a borrower who is temporarily credit-challenged and needs a 12-month Alt-A bridge to a prime mortgage.
• A more expensive five-year fixed may be preferable over a three-year fixed if the premium is low enough.
• A five-year fixed may suit a borrower prioritizing stability over cost.

Conclusion

A good mortgage broker considers both current and expected future rates, along with the borrower’s unique situation, needs, and risk profile. A proper suitability analysis acknowledges that more mortgage options and added security come at a price. By balancing these factors, a broker can recommend the best term and rate for each client.