Canada's Fixed Mortgage Rates Climb as Bond Yields Surge

Fixed mortgage rates in Canada are on the rise due to increasing five-year government bond yields. The yield has climbed from 2.6% before the war in Iran to above 3.6%, reaching a high of 3.7% on Monday.

CIBC and TD raised their select three- and five-year fixed mortgage rates on Tuesday, joining other major banks and lenders that have increased rates in recent weeks.

Bruno Valko, vice-president of national sales at RMG Mortgages, attributes the rise in bond yields to several factors, including elevated oil and commodity prices, inflation concerns, and interest rate hikes by central banks globally.

The Bank of Canada has maintained its policy rate steady, but rising global bond yields are putting upward pressure on Canadian yields. The OIS market is pricing in 100 basis points in Bank of Canada rate hikes over the next 12 months.