Why the Bank of Canada affects mortgage rates

In case you missed all the buzz about it this morning, the Bank of Canada has cut their benchmark rate by 25 basis points, to 0.50%. While this was widely predicted by many in the finance world, this does mean some changes for home buyers in the real estate market. A drop in the overnight rate, means a drop in mortgage rates, and many banks and lenders are already following suit. But if you’re unsure why the Bank of Canada rate affects mortgages, here’s a quick lesson on why the two are synonymous. What is the overnight rate? This is the interest rate at which…