Gary Kaloti

Canada’s central bank held its key rate recently, but five-year fixed mortgages kept edging higher, widening the gap with lower five-year variable options.
An expert said the lowest current five-year variable sat near ~3%, while the lowest comparable five-year fixed was near ~4%, making the spread quite large.
Fixed mortgages tracked Canada’s five-year bond yield, and rising yields recently added upward pressure, meaning fixed borrowing costs could continue moving higher near term.
A broker said the wider gap had borrowers weighing lower variable rates against added uncertainty, while others still preferred fixed loans for steadier monthly payments.
Economists expected the central bank could raise rates if inflation climbed, and experts said that shift may send more Canadians toward fixed mortgages.

Canada's Fixed Mortgage Gap Keeps Widening

Canadian borrowers weighing tariff risks should start with one key point: fixed and variable mortgage rates do not move together because each follows different forces.
For fixed mortgages, the main driver is federal bond yields, making bond-market moves especially relevant when trade tensions raise questions about rate direction.
For variable mortgages, the link runs through the central bank's overnight rate and lenders' prime rates, so policy shifts matter more there.
That split matters during a trade war because borrowers cannot assume every mortgage product will react the same way to tariff-related economic pressure.
Today's borrowers may benefit from comparing fixed and variable options separately, focusing on the forces behind each rate instead of expecting one shared path.