Overnight Rates

The overnight rate in Canada is an important part of Canada’s monetary policy. The Bank of Canada has control of the key overnight rate, which determines the interest rate that major financial lenders and institutions lend and borrow one-day (or "overnight") money between each other.

Overnight rates in Canada are tightly integrated into the monetary landscape of the Canadian economy and have much influence on the credit markets in Canada. Because of quick changes that can sometimes be required to stave off economic problems or to slow down the pace of growth to avoid inflation, there are 8 fixed dates each calendar year when the Bank of Canada can make changes to the target for the overnight rate, if required. Not every date sees a change in the rate, and there have been times in history when the overnight rate in Canada has stayed relatively level for long periods of time. The dates are there merely for protection in the event that swift action is necessary. This is important, as this target for the overnight rate is a regulator of sorts for the Canadian lending system.

Any change in the overnight or key target rate has an affect in direct proportion to consumer interest rates. These consumer interest rates are connected in some fashion to all consumer loans and mortgage loans in Canada. Mortgage rates in Canada vary from fixed rate terms to variable rate terms. Variable rate mortgages in Canada follow the prime lending rate. The Prime lending rate in Canada is closely monitored by the Bank of Canada and changes with the target for the overnight rate. It should also be noted that the overnight rate can also affect the exchange rate of the Canadian dollar.

Since the beginning of 2009, the overnight rate in Canada has been relatively low. January of 2009 saw the overnight rate at 1.00%. In a matter of 3-5 months, this rate quickly dropped in response to the worldwide credit crisis and we witnessed the lowest overnight rate in recent history. By the last quarter of 2009, the overnight rate dropped to an unprecedented 0.25%.

^* Note: Target for the overnight rate is currently at 1.00% . This report is updated regularly. Last report was on February 10, 2012 at 3:50PM

^* Mortgage interest rates are subject to change without notice at any time. Some rates may be subject to minimum credit score, loan amount and may only be available certain lending areas. A quick closing loan condition may be required. Does not apply to preapprovals. Contact CanEquity for details. Although every attempt is made to ensure the accuracy of our website, the above mortgage information should only be used as a guideline and CanEquity makes no guarantees on any rates shown. CanEquity Mortgage always recommends that you consult a mortgage broker before making a decision. For any mortgage related questions or to speak to one of our mortgage specialists, please call 1-888-818-4262. CanEquity does not guarantee to have the lowest rate in Canada. We do make every attempt though to find the best mortgage deal possible for all of our clients.

^§ Our mortgages are only available to Canadian residents or foreigners purchasing property located in Canada.