Increasing fixed mortgage rates are anticipated as bond yields hit a 16-year high

Following a 16-year high in the yield on Government of Canada bonds, which set fixed mortgage rates, fixed mortgage rates may rise sharply in the upcoming week.

Mortgage providers may increase rates by as much as 30 basis points (0.20% to 0.30%), according to rate experts.

According to Rudy Lochan, fixed rates should increase by 20 basis points as a result of this news, but greater increases may be possible if bond yields continue to rise.        

Following this week's higher-than-anticipated inflation estimate in Canada and remarks from the U.S. Federal Reserve, which both signaled that interest rates may stay high for longer than anticipated, yields rose to levels last seen in 2007.

Rising interest rates' effects

Both variable-rate borrowers and those getting new mortgages at these high rates—or renewing existing ones at them—will be impacted by growing expectations of a "higher for longer" interest rate environment.

More than two thirds (69%) of respondents to a survey by Mortgage Professionals Canada this week said they were concerned about renewing at a higher interest rate. 65% of mortgage holders anticipate to renew their mortgage in the next three years.

Due to the rate increases thus far, debt servicing expenses are reaching all-time highs.

The most recent big bank rate predictions

The most recent interest rate and bond yield predictions from the Big 6 banks are listed below, along with any revisions to those predictions.