What are interest rates based on? Well for short term interest rates they are based on the bank prime lending rate which is determined by the bank of Canada’s overnight lending rate. For fixed term interest rates they are based on the government of Canada long term bonds.

Now, why is this important? Why is this question something I think you should ask? Well first of all, I think when you do ask it people may come back to you with sort of a general answer and again, I really encourage you to push them to give you more specifics.

Why? Because of the way both short term and long term interest rates operate, they’re totally not correlated. So that means I have to be watching certain indicators in each one of those markets so that I can have a sense of where I think interest rates are going and therefore create a strategy that makes sense for you. So if somebody doesn’t really understand the basics of where interest rates come from and how they are determined then how can they possibly be watching the right indicators and then how can they possibly give you a solid strategy that is going to help you for your overall financial wellness.

Thanks for watching.

If you would like more information on this or other mortgage related topics contact Canada Mortgage Direct in one of the following ways:

Visit our website at CanadaMorgageDirect.com.

You can phone our office: 403-250-2100

Or you can email us at Save@CanadaMortgageDirect.com

We would also like to invite you to the Canadian home Buyers Academy and you can visit us there at the CanadianHomeBuyersAcademy.com

Thanks again!

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