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TORONTO — Canada’s big banks are locked in a competitive pricing war over variable-rate mortgages, but economic trends point to more interest rate hikes ahead — leaving Canadian mortgage borrowers struggling to interpret the mixed messages.

The Bank of Canada has raised its trend-setting interest rate once this year and is expected to do so at least once more before the end of 2018. When interest rates rise, banks are inundated with demand for fixed rates, so borrowers can lock in their rates.

As a result, Canada’s lenders are working to attract borrowers to variable-mortgage rates, which are tied to the fluctuations of the central bank’s overnight rate. They are offering special rates as low as 2.45 per cent for May, some of the biggest-ever widely advertised discounts advertised by the big banks. At the same time, they have increased the rates of their fixed-rate mortgages.

Even in this rising interest rate environment, experts suggest current variable-rate options are attractive when compared to fixed-rate mortgages.

“Up until recently, when asked, I had been favouring the fixed over the variable,” said Dave Larock, president of Integrated Mortgage Planners Inc. in Toronto.

His attitude changed after fixed-rate mortgages became more expensive in response to higher bond yields and variable-rate mortgages got cheaper due to competition among lenders.