Canadian major banks raise fixed mortgage rates

All six of Canada’s major banks have implemented increases to fixed mortgage rates, with some adjustments reaching as much as 0.5 percentage points. These hikes, driven by rising bond market yields rather than direct changes to the Bank of Canada’s policy rate, are adding financial pressure to homeowners and prospective buyers.

Specific lenders, including CIBC, TD Bank, BMO, National Bank, RBC, and Scotiabank, have adjusted rates on various terms. For example, a 0.20 percentage point increase on a $500,000 mortgage with a five-year term adds approximately $55 to monthly payments. The movement follows a surge in the five-year Government of Canada bond yield, which recently hit a 52-week high.

While the Bank of Canada has maintained its key policy interest rate at 2.25%, financial markets have increased expectations for a potential central bank rate hike. Overnight swap-market pricing suggests an approximately 80% probability of an increase at the upcoming October 28 meeting, up from 30% just a week prior, due to inflation concerns and rising energy prices.