Bond yields have been riding high lately, reaching some of their highest points since 2024 as the market reacted to hawkish commentary from the Bank of Canada this week.
Moreover, the Canadian five-year bond yield – the benchmark for fixed mortgage rates – is heavily affected by U.S. bond yields, which have been elevated in part due to rampant spending by the United States government, said David-Alexandre Brassard, chief economist at the Chartered Professional Accountants of Canada.
This could lead to higher fixed mortgage rates, which have already stood above the 4-per-cent mark for some time.
If you believe the Bank of Canada’s commentary and market expectations around rate policy, headline interest rates could also be on their way up.
But if the current status quo with tariffs and the war in Iran lasts, Mr. Brassard believes otherwise.
“Downward risk from tariffs is bigger to me than upward risk from higher oil prices,” said Mr. Brassard, who said higher oil prices haven’t yet translated to widespread inflation.
“In the longer term, we’ll suffer more from the U.S. trade war.”
For now, he said variable mortgages could be getting cheaper, even as fixed rates get more expensive.
However, Mr. Brassard said it remains to be seen whether homeowners will be willing to opt for a variable-rate mortgage when the economy and global events are so volatile.
“If you’re a fixed-rate person, the spread isn’t big enough to change your mind yet,” he said.
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Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday afternoon.
