Interest Rates

When discussing Commercial financing, interest rates are market driven and change daily, unlike residential financing interest rates which typically have a longer delay between changes.

So why are Bank of Canada Bond Yields showing at the top of my screen? 

They are provided to help you better understand how banks determine the interest rate you will get on your financing.

When you get financing from a bank, they charge you an interest rate based on the cost of their funds plus a spread.  For most banks, their cost of their funds changes daily and similarly follows the Bank of Canada bond yields.  Banking institutions then apply a spread based on the risk of the file.  Usually you'll find banks will charge between 2.0% and 3.5% as a spread on top of their cost of funds.  So as an example, if you chose a 5 year fixed rate commercial mortgage which funded in early 2025, the cost of funds for the bank would have been between 2.5%-3.0% depending on the specific date.  Let's use 2.75%.  Once the bank analyzes the risk of the financing request, they'll determine an appropriate spread to charge on the financing and will add that to get to their interest rate.  If you have a simple file in a solid industry then it may be as low as 2%, which in this example would get you to an interest rate of approximately 4.75% fixed for 5 years.  Higher risk files could be as high as 6.25% and some lenders who provide specialty financing options can be higher.

What is shown above is that Bank of Canada Bond Yields go up and down on a daily basis and can help you see where rates have been moving over the last 5 years.  You can then see where interest rates are likely to be heading but it can change without notice.  This is not a projective model and can not tell you what will happen in the future, just a history of Bank of Canada Bond yields which, as a tool, can hopefully help you understand interest rates a little better.