Interest Rates

When discussing Commercial financing, interest rates are market driven and change daily, unlike residential financing interest rates which typically have much longer time 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.  The cost of their funds is usually within the range of Bank of Canada bond yields and their spread is 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 a borrower chose a 5 year fixed rate commercial mortgage which funds on January 24, 2025, the cost of funds for the bank is about 2.76%.  Add their spread (let's say you have a simple file in a solid industry) which in this example is 2.5%, your interest rate would be approximately 5.26% fixed for 5 years.  

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.  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.