A Warning About Canadian Fixed Mortgage Rates

Fixed mortgage rates may rise despite expected cuts from the Bank of Canada (BoC). While the BoC has reduced its policy rate from 5.0% to 3.75%, these cuts primarily affect variable rates. Fixed rates are influenced by Government of Canada (GoC) bond yields, which are also impacted by rising US Treasury yields. Recent US inflation data suggests a more gradual Federal Reserve rate-cut timetable, leading to caution for borrowers anticipating lower fixed rates. The gap between fixed and variable rates may close sooner than expected.