Variable Rates are based on the prime lending rate which you can find here. Prime rate is first determined by the Bank of Canada then subsequently, institutional lenders.
How your rate is determined depends on what discount or premium you get approved for. Say prime rate is at 3.00% and you get approved for “Prime minus .50%” – that would mean your rate would be 2.50% so long as prime doesn’t change.
Prime rate is subject to change with little to no notice which can deter some borrowers from choosing this mortgage product. In the example above, if prime increased from 3.00% to 3.25% then your rate would effectively increase to 2.75%. However if it decreased to 2.75% your rate would drop to 2.25%.
Variable rates are priced lower than fixed rates which can make them appealing. However, the uncertainty can dissuade one from going this route.
The best thing you can do is speak with one of our mortgage specialists to determine which mortgage product fits your personal situation the best.