Glossary
Posted Rate
A posted rate is the headline mortgage rate a lender publishes publicly, and it is usually higher than the discounted rate most borrowers actually receive..
A posted rate is the headline mortgage interest rate a lender publishes on its website, in branch, or in advertising, and it is typically higher than the rate most borrowers actually receive after negotiation or a discretionary discount.
How posted rates work in Canada
For a fixed-rate mortgage, a lender sets a posted rate and then applies a discount for borrowers who meet its criteria. The rate written on the mortgage commitment — the one that drives your payments — is often called the discounted rate, and it can sit well below the posted figure. Variable-rate mortgages are usually quoted differently, as the prime rate plus or minus a spread, so the posted rate concept applies mainly to fixed terms.
Posted rates move with funding costs, bond yields, and competition between lenders. The Bank of Canada publishes a survey of conventional mortgage rates that acts as a public posted-rate benchmark, which is useful for tracking trends rather than predicting the rate you will be offered.
Why the posted rate matters to borrowers
- Discounts are discretionary. Two borrowers can be quoted different rates on the same day for the same product.
- Your qualifying rate for the federal mortgage stress test is based on your contract rate plus a buffer, or a set floor, whichever is higher — not on the posted rate. Confirm the current rule with your lender.
- Prepayment penalties. Many lenders calculate the interest rate differential by comparing the posted rate on your original mortgage with the posted rate for a comparable term when you break it.
Posted rate vs discounted rate
| Posted rate | Discounted rate | |
|---|---|---|
| Where it appears | Published rate sheets and ads | The mortgage commitment and registered document |
| Negotiable | Rarely for an individual borrower | Often, with strong credit or a broker |
| Also used for | Some penalty and IRD calculations | Your actual payments and interest cost |
Because the gap between the two can change how much interest you pay and how large an early-payout penalty becomes, compare the rate on your commitment rather than the advertised number. See how mortgage rates work in Canada for the broader picture.
Frequently asked questions
Is the posted rate the same as the rate I will actually pay?
Usually not. Lenders typically apply a discount to the posted rate based on credit score, down payment, term, and competition, so the contracted rate is lower. Some borrowers, including those with weaker credit or unusual properties, may pay closer to the posted figure. Always check the rate stated on your mortgage commitment.
Why do lenders advertise a posted rate if most borrowers pay less?
Posted rates give lenders a consistent public reference point and leave room to negotiate. They also feed into other calculations, such as interest rate differential penalties on some fixed-rate mortgages. Because discounts are discretionary and can change at any time, two borrowers may be quoted different rates for the same product.
How do posted rates affect mortgage prepayment penalties?
Many lenders calculate the interest rate differential by comparing the posted rate on your original mortgage with the posted rate for a similar remaining term when you break it. If posted rates have fallen, that gap can be wide and the penalty can be significant. Review how your lender defines the posted rate in your mortgage documents.
Sources
Related terms
- Discounted Rate — The discounted rate is the actual mortgage interest rate a lender offers a borrower after negotiation or promotion, sitting below that lender's published posted rate.
- Prime Rate — The prime rate is the interest rate Canadian banks charge their most creditworthy borrowers, and it is the benchmark used to price variable-rate mortgages and lines of credit.
- Interest Rate Differential (IRD) — A penalty formula some Canadian lenders use when a fixed-rate mortgage is paid off early, based on the interest the lender loses.
- Mortgage Stress Test — The federal mortgage stress test is a qualification rule that makes lenders check whether you could afford your mortgage if rates were higher than your contract rate.
- Annual Percentage Rate (APR) — The Annual Percentage Rate (APR) expresses the yearly cost of borrowing including certain fees, not just the interest rate, for easier comparison.