Why Canadian Fixed Mortgage Rates Are Rising Again
Renee Huse, founder of Spire Mortgage Team in Calgary, Alberta, has seen this cycle play out before — and right now, we’re in the “market whiplash” phase. Just weeks ago, rates dropped sharply. Now they’re climbing again.
We’re not seeing a stable trend. We’re watching a bond market ride global turbulence — and that matters because fixed mortgage rates in Canada move with the 5-year Government of Canada bond yield.
Why Are Fixed Rates Rising Now?
Two months ago, we saw rates fall when bond yields dropped, largely thanks to concerns around U.S. tariffs. At that point, the U.S. 10-year Treasury yield fell below 4%, and Canada’s 5-year yield dropped to around 2.50%.
Fast forward to today:
- U.S. 10-year Treasury: Above 4.5%
- Canada’s 5-year bond yield: Up to 2.85%
- Mortgage rates: Rising in response
This isn’t about Canadian data. It’s global. And that global pressure is already prompting banks to raise rates — even though the Bank of Canada hasn’t moved.
How the U.S. Influences Your Canadian Mortgage Rate
“What influences the 5-year Government of Canada bond is not necessarily what’s happening in Canada,” explains Bruno Valko of RMG. “In many cases, it’s the yield on the 10-year U.S. Treasury.”
Several U.S. factors are pushing yields higher:
- Cooling inflation, fueling speculation about rate cuts
- Investor fear of stagflation (high inflation + low growth)
- Tariff uncertainty driving volatility
- Foreign buyers pulling back from U.S. Treasuries
- Roughly $7 trillion in U.S. debt maturing and needing to be refinanced
All of this makes bonds more expensive — and that flows directly into mortgage pricing.
Case Study: Locking In Before the Hike
Clients: Ryan and Janelle, upgrading from their starter home in McKenzie Towne
Mortgage: $695,000
Rate held: 3.94% five-year fixed (mid-April)
Current market rate: 4.24%
Saved: $10,395 over 5 years
They acted on our advice, locked their rate before shopping — and beat the market’s next move.
What Are the Banks Doing?
- CIBC and RBC: Raised 5-year fixed rates by 10 bps
- TD: Increased 3-year fixed by 10 bps and 5-year by 15 bps
- Scotiabank: Lowered some digital rates against the trend
Should You Lock In or Float?
If you're rate-sensitive and want stability, a five-year fixed may still be your best friend — especially while rates are still under the 30-year average.
“If this were my own money? I’m locking in. Rates are still below the 30-year average, and I’d rather set it and forget it than lie awake at night wondering if I should’ve moved faster. Peace of mind matters.” — Renee Huse
Our Strategic Advice for May 2025
- Get a rate hold. Don’t wait. We can secure it for 120 days.
- Check your renewal window. If you’re within 4 months, we can act.
- Think beyond the 5-year. For some, a 2- or 3-year fixed may be smarter.
- Stay strategic. We’re watching markets daily so you don’t have to.
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FAQ: Fixed Mortgage Rates Explained
Why are fixed mortgage rates rising in Canada?
Because 5-year Government of Canada bond yields are increasing — and fixed rates are directly tied to those yields.
Has the Bank of Canada raised rates?
No — fixed mortgage rates are driven by bond yields, not the Bank of Canada’s overnight rate.
Should I lock my rate now?
Yes — if you’re buying or renewing in the next 120 days, locking in protects you from further increases.
Are variable rates still worth considering?
They might be — if the Bank of Canada starts cutting rates as expected, variable could outperform fixed over time.
What’s the difference between bond yields and Bank of Canada rates?
Bond yields affect fixed rates. Bank of Canada rates affect variable. They’re separate but often move in similar directions.
Glossary
- Fixed Rate: A consistent interest rate for the full mortgage term.
- Bond Yield: The return investors get from government bonds. Influences fixed mortgage pricing.
- 5-Year GoC Bond: Canada’s benchmark for pricing 5-year fixed mortgages.
- Basis Point: One hundredth of a percent (0.01%).
- Rate Hold: A locked-in rate valid for 90–120 days, protecting you against market increases.
- Renewal: When your current mortgage term ends and you choose a new rate and term.
- Variable Rate: A mortgage rate that can rise or fall based on Bank of Canada policy.
- Stagflation: A period of high inflation combined with stagnant economic growth and high unemployment.
