Fixed Rate vs Open Rate

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Fixed Rate Mortgages

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Fixed rate mortgages (FRM) are fully Amortized mortgage loan where the interest rate on the note remains the same throughout the term. As a result, the payment amount remains the same for the entire term. Fixed rate mortgages allow borrowers to plan their budget consistently. 

Fixed rate mortgages are related to the yields in the bond market which is effected by the country's political and economic conditions. 

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Variable Rate Mortgages

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Variable rate mortgages (VRM) or Floating rate mortgage are mortgages where the interest rate fluctuates during the term of the mortgage. The rates coincides with the Bank of Canada's Prime Lending Rate. 

The Government of Canada uses Prime lending rate to adjust for inflation. If the country experiences low inflation, the prime lending rates will remain consistent. If inflation rises, the prime lending rates will also increase with the intention to slow down the activity in the marketplace.