Canada's Reverse Mortgage Rates Start Rising with Bond Yields at Two-Year High

Reverse mortgage rates in Canada have started to rise as bond yields reach a two-year high. According to Richard Hopkins, an Ontario mortgage broker, one of the four reverse mortgage lenders increased its five-year rate by 0.55 percentage points on August 31.

HomeEquity Bank, the largest reverse mortgage lender in Canada, raised its advertised five-year fixed rate from 6.39 per cent to 6.94 per cent effective August 31. Meanwhile, two other lenders held their five-year rates steady through mid-September.

The widening gap between the lowest and highest advertised five-year reverse mortgage rates is now at 0.71 percentage points, up from 0.16 in July.

Despite the Bank of Canada keeping its policy rate at 2.25 per cent, fixed reverse mortgage rates follow Government of Canada bond yields, not the policy rate. The five-year bond yield climbed to 3.65 per cent on September 11, its highest level since May 2024.