CANADA’S FIVE-YEAR BOND YIELD PULLS BACK FROM ITS SEPTEMBER HIGH
Fixed mortgage rates in Canada are priced off the Government of Canada bond yield, and each lender adds its own margin on top. The five-year yield touched 3.73 per cent on September 24 and closed at about 3.53 per cent on October 15, roughly where it was in mid-September. With the five-year yield around 3.5 per cent, five-year fixed rates are around 5 per cent, give or take a bit depending on the type of mortgage.
The climb in yields came from a global bond selloff that pushed government bond yields to multiyear highs. Bloomberg reports that markets have since scaled back their expectations for central bank rate hikes, because higher yields tighten financial conditions on their own. That matters for variable rates, which in Canada move with the Bank of Canada’s rate rather than the bond yield. The Bank has held its rate at 2.25 per cent since last October, which leaves prime at 4.45 per cent. Its next decision is October 28, and Statistics Canada releases the September inflation report on October 19.
What this means for your mortgage: fixed rates follow the bond yield, and variable rates follow the Bank of Canada. When the yield falls, lenders have more room to lower fixed rates, but how quickly and by how much is each lender’s decision. If you are buying or renewing in the coming weeks, the fixed rate you are offered reflects the yield at the time it is set, so it is worth asking how long a rate hold lasts and what happens if rates move before you close or renew.
FEWER CANADIANS ARE CHOOSING THE FIVE-YEAR FIXED THAN AT ANY POINT SINCE 2013
A National Bank of Canada research note by senior economist Daren King found that fixed terms of five years or longer made up just 8.8 per cent of new mortgages in July. That is the lowest share in the data going back to 2013. The other 91.2 per cent were a mix of shorter fixed terms and variable rates.
According to the report, borrowers favoured shorter fixed terms in 2023 and 2024, and those terms then lost ground to variable rates in 2025 and 2026. CMHC data shows variable rates fell below fixed rates in late 2025 for the first time since 2022, and by February variable made up 42 per cent of mortgages extended by chartered banks. The National Bank report notes that the more households choose short terms or variable rates, the faster Bank of Canada decisions reach their mortgage payments.
What this means for your mortgage: the term and the rate type decide how soon your payment responds to rate changes. A variable rate or a shorter term gives you a payment that adjusts sooner, and a shorter term also means you renew sooner. A longer fixed term gives you a set rate for longer. Each one carries a different kind of risk, and which fits depends on your budget, how much payment change you can absorb, and how long you expect to hold the mortgage.
RENEWING BORROWERS ARE SEEING PAYMENTS RISE BY $375 A MONTH ON AVERAGE
CMHC’s 2026 Mortgage Consumer Survey found that renewing borrowers have seen their monthly payments rise by an average of $375, a figure cited by industry speakers at MortgageFest Canada in Toronto. RBC economist Claire Fan expects household debt service ratios, which measure the share of income going to debt payments, to keep edging higher into 2027 as the last of the pandemic-era low-rate mortgages finish renewing.
What this means for your mortgage: your renewal payment depends on your balance, the new rate and your amortization, and the rate you are offered depends on the bond yield at the time. Looking at the renewal number well before your maturity date, and comparing the offer from your current lender with other options, gives you more room to plan than deciding in the final weeks.
WHERE THINGS STAND
If you have a variable rate, what matters is the Bank of Canada, and its next rate decision is October 28. If you are looking for a fixed rate because you’re purchasing or renewing soon, what matters is the bond yield. And if you chose a shorter term, you’ll be renewing sooner.
Call or text 249-480-1249. HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources: CMT News / Bloomberg (October 12, 2026); Canadian Mortgage Professional (October 9, 2026, on the five-year fixed share and on bond yields and household debt service; October 13, 2026, on renewal payment increases); National Bank of Canada; CMHC; RBC Economics; Bank of Canada; Government of Canada five-year bond yield data (closing prices to October 15, 2026); Statistics Canada