The Bank of Canada hasn’t moved on rates, so why has your fixed mortgage rate jumped?

The lowest five-year fixed rate for an insured mortgage at the time of writing is 4.34 per cent, up from 3.94 per cent a month ago. For refinances and other uninsurable mortgages, the lowest rate has climbed to 4.64 per cent from 4.24 per cent over the same period.

So why are mortgage rates rising when the Bank of Canada hasn’t changed its policy rate this year? The answer is that while that primarily influences variable mortgage rates, fixed mortgage rates are driven largely by bond yields. Those yields reflect not only expectations for the Bank of Canada’s future policy rate, but also a broader range of economic and financial factors.

A lender offering you a five-year fixed rate takes a risk: its own borrowing costs could rise during that time. Lenders raise money through deposits and mortgage-backed securities, and use tools such as interest rate swaps to protect themselves.

Still, their costs closely follow five-year Government of Canada bond yields, partly because a fixed-rate mortgage shares some features with a government bond, such as fixed payments over a set term. It is riskier, though, because the borrower could default or pay it off early. Three-year mortgage rates likewise tend to move with three-year bond yields.

Lenders then add charges for credit risk, hedging, operating costs, and profit. Insured mortgages are cheapest because the mortgage default insurers carry the default risk. The gap between the mortgage rate and the bond yield is called the spread, and it varies by lender. The table below uses the lowest available rate.

Fixed mortgage rates follow bonds, but slowly. Bond yields move almost every day, while mortgage rates change only once every week or two. When bond yields rise or fall, lenders typically pass on the change gradually over the following weeks. They are also quicker to raise rates than to cut them.

In the past 12 months, the five-year yield has climbed about 80 basis points, in line with rising bond yields around the world. Over the same period, the lowest five-year rate rose only about 45, which shows that the spread has been lower this year than in previous years. (There are 100 basis points in a percentage point.)

Part of the reason is simple competition, as lenders chase the wave of 2020–21 mortgages coming up for renewal. Another may be lenders’ belief that yields could fall if geopolitical tensions ease, especially in the Middle East. If yields hold, mortgage rates may edge up further; if they fall, relief will likely come more slowly than the increases did.

Based on WOWA data lab’s daily research on the lowest available mortgage rates and Government of Canada bond yields in recent years, here is a simple rule of thumb: take the average five-year bond yield over the past two weeks and add 0.8 to 1.0 percentage points.

For the lowest five-year insured rate, that gap averaged about 1.0 in 2025 and about 0.8 so far in 2026. A rate well below that range is likely to rise soon.

Hanif Bayat, PhD, is the CEO and founder of WOWA.ca, a Canadian personal finance platform.