The Bank of Canada hasn’t moved on rates, so why has your fixed mortgage rate jumped? — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Five-year fixed insured mortgage rates climbed to 4.34% from 3.94% in one month, with uninsurable and refinance rates rising to 4.64% from 4.24% over the same period.
- The Bank of Canada hasn't moved its policy rate this year — fixed rates follow five-year Government of Canada bond yields, not the policy rate that governs variable mortgages.
- Five-year Government of Canada bond yields rose about 80 basis points over the past 12 months, while the lowest five-year fixed rate climbed only ~45 basis points, showing lenders have kept spreads tighter than in previous years.
- Lenders are competing aggressively for the wave of 2020-21 mortgages up for renewal and expect yields could fall if Middle East tensions ease — both factors slowing the pass-through of bond-yield increases into posted mortgage rates.
- WOWA's rule of thumb: add 0.8 to 1.0 percentage points to the two-week average five-year bond yield; the gap averaged ~1.0 in 2025 and ~0.8 so far in 2026, meaning rates well below that range are likely to rise soon.
Why it matters: Over the past year, lenders absorbed about half of an 80-basis-point rise in five-year yields by compressing their spreads — driven by competition for the 2020-21 mortgage renewal wave. Once that renewal rush cools and competition fades, the cushion between mortgage rates and bond yields narrows, leaving borrowers with less rate relief if yields later retreat.
Ask SkimNews
