06/07/2026
Following the bond market for mortgage trends
While the Bank of Canada’s policy rate gets most of the headlines, it’s actually bond yields that play a role in your fixed mortgage rate.
Looking back at the last several years, the pattern is clear: at the start of the pandemic, the economy slowed sharply, bond yields fell and interest rates followed suit. That’s when Canadians were able to lock in at incredibly low rates—some even lower than 2%.
“Most clients don’t realize that the bond yields and mortgage rates move together. This means, what’s happening in the world today, can directly impact their qualifying mortgage payments,” says Khalid. “For example, geopolitical tensions have choked global oil supplies and spiked Brent crude prices (a key global benchmark for oil prices). These energy costs ripple quickly into consumer prices, which raises the risk of inflation staying elevated and leads to interest rates staying higher for longer.”
“Canadian long-term bond yields move closely in step with the U.S. Treasuries,” adds Khalid. “A recent surge in U.S. yields, driven by strong U.S. economic data, government overspending, and worries about trade have made borrowing more expensive in America. And Canada is feeling it too, with interest rates climbing here as well.”
In 2024, the Bank of Canada began an aggressive easing cycle, cutting its policy rate nine times between June 2024 and this article’s publication date. As of April 29, 2026, the overnight rate sits at 2.25%, held there for three consecutive decisions, with the prime rate at 4.45%. For variable-rate mortgage holders, that’s translated into meaningful relief compared to the 5% 2023-2024 peak.
