Are Fixed Mortgage Rates About to Rise?

If you have been watching mortgage rates and hoping they will drop soon, the latest movement in the bond market may not be the news you wanted to hear.

Bond yields have been climbing around the world, including here in Canada. That matters because Canadian fixed mortgage rates are closely connected to Government of Canada bond yields. When bond yields rise, lenders’ funding costs increase—and fixed mortgage rates usually follow.

So, what is pushing yields higher?

One major factor is oil. Oil prices have climbed above $100 per barrel, increasing concerns that inflation could remain higher for longer. Fuel costs affect much more than what we pay at the pump. Higher transportation and production costs eventually make their way into the price of groceries, building materials, deliveries and everyday goods.

The Bank of Canada has previously warned that sustained oil prices around these levels could require tighter monetary policy. In plain language, if higher oil prices keep inflation elevated, the Bank may have less room to lower rates—and could even consider increasing them.

The second concern is what is happening in the United States.

The U.S. 10-year Treasury yield has been moving toward 5%, a level it has not closed at since 2007. Investors are increasingly concerned about American government debt, inflation, tariffs, continued spending and the possibility that interest rates will need to remain higher for longer.

Canada does not operate in isolation. When U.S. Treasury yields rise sharply, Canadian bond yields are often pulled higher too. That creates additional pressure on our fixed mortgage rates, even if the Canadian economy itself is showing signs of slowing.

We are already seeing the impact. More than a dozen lenders recently announced fixed-rate increases of approximately 0.10% to 0.15%. That may not sound dramatic, but small changes can add up over the life of a mortgage—especially when buying or refinancing at today’s home prices.

The good news is that fixed mortgage rates close to 4% may still be available for some borrowers and mortgage types. However, that window may not stay open for long.

Does this mean everyone should immediately choose a five-year fixed mortgage? Not necessarily. Your best option still depends on your plans, budget, risk tolerance and how likely you are to sell, refinance or make large prepayments during the term.

However, with markets now anticipating the possibility of several rate increases over the coming year, fixed rates are starting to look more attractive compared with variable rates—particularly for homeowners who value predictable payments and expect to keep their mortgage for the full term.

The important thing is not to panic or make a decision based only on a headline. If you are buying, renewing or refinancing, now is a good time to review your options and consider securing a rate hold. A rate hold can offer some protection if rates rise while still allowing us to explore better options if the market improves before closing.

Every mortgage situation is different. Let’s look at the full picture and choose the mortgage that makes the most sense for you—not just the one with the most attention-grabbing rate.

Source: Adapted from Rob McLister’s September 11, 2026 special report, “The Wheels Are Coming Off,” published by Mortgage Logic Network.