Bond Yield Surge Hits Home: Canadians Face Rising Mortgage Rates

The global bond market has been experiencing a surge in yields, and Canada is not immune to its effects. This past week saw a key U.S. Treasury yield push towards 5%, an important psychological level for markets.

Analysts say the recent rise in bond yields is driven by higher oil prices following the Iran war, as well as concerns about the United States' fiscal health.

U.S. President Donald Trump's promise to send a $5,000 cheque to every American if the Republicans win the mid-term elections has fueled worries about the country's growing debt.

National Bank of Canada economists Daren King and Kyle Dahms noted that Canada has also seen an increase in bond yields, with the 5-year rate rising by 16 basis points last week to a two-year high of 3.65%.

This is significant because it serves as a benchmark for 5-year fixed mortgage rates, which have started to rise as well.

Clinton Wilkins, a mortgage broker, said that some lenders are now offering mortgages with interest rates up to 100 basis points higher than before.