Hey Everyone,
Some of the most common questions I get are around the terms and trends behind the scenes that have a say on the mortgage and rate you end up getting.
And let’s be fair here, mortgage terms and rate talk can feel like a blur.
One week it seems like everything is moving the numbers (inflation, jobs, elections, oil prices), and the next week nothing makes sense at all. You’re not alone if you’ve wondered, “How on earth do they actually decide these rates?”.
One of the biggest players hiding in the background is the bond market. Think of it like a giant scoreboard where investors are constantly betting on the economy’s future. If they believe things are slowing down, they’ll settle for lower returns, bond yields drop, and that usually drags fixed mortgage rates down too. If they expect more growth or sticky inflation, they want higher returns, bond yields rise, and lenders quickly bump up rates to match.
So the next time you hear “bond market” in the news, picture it as the invisible tug-of-war behind your mortgage payment. Here’s how it plays out depending on where you stand:
1. Existing Mortgage Holders with Fixed Rates
Good news: Your payment doesn’t change until your renewal date.
Why it matters anyway: When your term ends, your renewal rate is built off where bond yields are sitting at that time. If yields rise between now and then, you could face higher payments than you’re used to.
Takeaway: Even if you’re comfortable now, the bond market is quietly shaping your future rate. Looking six months ahead of renewal gives you options instead of surprises.
2. Existing Mortgage Holders with Variable Rates
The connection: Variables move with the Bank of Canada’s overnight rate, not bonds. But bond yields set the tone for what the market expects the Bank to do next.
Why it matters: If bond traders believe more cuts are coming, yields drop, and relief may be on the way for variable borrowers. If they think the Bank is done cutting, rates may stay higher for longer.
Takeaway: You’re riding the BoC wave, but the bond market often spots the wave forming before the rest of us.
3. Planning to Get a Mortgage in the Next 3 Months
Here’s where it bites: Fixed-rate offers can change overnight if bond yields swing, even when the Bank of Canada hasn’t touched its rate.
Why it matters: You could be pre-approved at one rate today, and by next week that same mortgage might cost you more. Or drop lower if yields cool.
Takeaway: If you’re shopping, rate holds are your safety net. Lock something in now, and if things settle down later, you can always choose the better deal.
I know bond rate chatter can feel like it’s happening in some far-off world, but it has a very real pull on your mortgage. Think of me as your safety net in all this, I can help you secure a rate hold that works for you while you figure out the next steps.
Whether you’re three years into your mortgage, three months from renewal, or three weeks away from buying, a pre-approval or renewal evaluation today gives you peace of mind tomorrow. Let’s lock in your options before the market makes its next move.
Have a good weekend everyone,
-Andrew
Text me, right now! 250-919-5474
I don’t say this on a whim, I’m serious, if you text me now, I can show you exactly where you stand within a few hours. No stress, no pressure, no obligation.
Just a simple text that can put you at ease.