Fixed mortgage rates have been rising over the past week, which has been boosted by a rebound in bond yields after exceeding expected economic data.
These growth was driven in part by a portion of rising U.S. treasury production, which rose to more than 4% in five years after exceeding expected inflation data. This, in turn, helps increase Canadian bond yields, closely related to their U.S. counterparts.
On this side of the border, Canada’s June employment report increased momentum. As fixed mortgage rates are closely linked to government bond yields, upward pressure is enough to prompt some lenders to raise their pricing, especially during the 3- and 5-year periods.
Some lenders have seen a rate hike (0.05 to 0.10 percentage points) in the past week, and have continued to increase further this week.
Although lenders have different changes, they reflect short-term trends that some observers see as higher fixed rates.
“Some lenders’ responses were raised on Friday to raise fixed mortgage rates, and I hope others will follow,” wrote Mortgage broker Dave Larock. “These increase is consistent with my recent assessment of bond yields, as well as fixed mortgage rates priced on price, now have an upward bias.”
Ron Butler of Butler’s mortgage loans said the rise in long-term yields was also affected by greater fiscal pressure. He told Canadian Mortgage Trends.
He added that over the next few months, fixed mortgage rates for 3 to 5 years (currently the 4% range is all within the 4% range).
Inflation data companies’ expectations for BOC holdings
Larock noted that while June’s employment data may not significantly affect Canadian banks’ interest rate outlook, the June inflation results were released Tuesday. Statistics Canada reported that the country’s annual inflation rate reached 1.9% in June, and core inflation measures remained stubborn.
Bank of Canada will maintain its key interest rates on July 30, meaning that existing variable rates and HELOC borrowers will not change.
“The central bank will almost certainly be held this month,” Butler said. “There does not appear to be a BOC cut from July or September, but as the economy worsens, I expect one in October or December could happen.”
Many fixed terms are still tightly priced
Despite the growing hikes lately, Laroque notes that fixed interest rates are still below its long-term average. Term premiums are usually locked in longer extra fees and start backing, but many popular fixed terms are still priced similarly.
With the three-year and five-year term, Larock said he continues to favor a five-year fixed fix.
He added that variable interest rates may provide the lowest overall borrowing costs over time, assuming the reduction rate is in line with expectations. But he warned that if the timing of these cuts shifts further, preparations need to be made for continued volatility and higher payments.
He wrote: “Anyone who chooses a variable rate should do this only if they are able to have their inherent volatility potential and if my financial capacity is to bear higher costs (in some cases, if my prediction is incorrect, they all have higher costs (in some cases, payment).
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Canada 5-year bond yield bank bond yield dashboard Dave Larock fixed mortgage interest rate raises fixed mortgage interest rate trend
Last modified: July 16, 2025
