OTTAWA, September 3, 2026, 14:50 EDT
- Canada’s lowest advertised five-year fixed mortgage rate was 4.09% at 13:05 EDT.
- The comparable variable offer was 3.30%, leaving a 79-basis-point gap.
- Canada’s five-year government yield was 3.415% at 14:46 EDT.
- The Bank of Canada held its policy rate at 2.25% on Wednesday.
Canada’s cheapest advertised five-year fixed mortgage stood at 4.09% on Thursday. The lowest variable offer was 3.30%. That gap persisted after the Bank of Canada kept its policy rate unchanged current mortgage offers.
The 79-basis-point premium matters more than the unchanged central-bank headline. On a C$500,000 mortgage, it adds about C$211 to the monthly payment.
Two pricing channels have split. Variable loans follow bank prime rates and overnight policy. Fixed loans track government bonds, where investors price inflation and term risk.
Canada five-year government yield
Daily closes through September 2; September 3 is the intraday reading. Unit: percent.
As of . Sources: Bank of Canada and Investing.com market data.
The five-year government yield closed Wednesday at 3.42%. It had gained 20 basis points since August 25. The yield eased to 3.415% by 14:46 EDT on Thursday market data.
The central bank acknowledged that long yields have risen globally. It held overnight policy at 2.25%, while warning that inflation risks increased Bank of Canada decision.
Governor Tiff Macklem sharpened that warning. He said policymakers were “prepared to raise interest rates” if inflation stayed too high Reuters.
Canada’s mortgage pricing ladder
Mortgage offers updated September 3 at 13:05 EDT; bond yield captured at 14:46 EDT; posted benchmark dated September 2. Sources: Ratehub and Bank of Canada.
The fixed offer sat 67.5 basis points above the government yield. That margin must cover funding, capital, credit risk and lender economics. It can change before official policy does.
Qualification adds another hurdle. Canada’s stress test uses the higher of 5.25% or the contract rate plus two points. The 4.09% fixed offer therefore qualifies at 6.09%.
What the rate gap means for C$500,000
Illustrative monthly payments over a 25-year amortization.
TS2 calculation using equal monthly payments and Canada’s semi-annual compounding convention. Rate inputs: Ratehub, September 3, 2026. Figures exclude fees, insurance and taxes.
The fixed premium costs about C$2,528 annually in that illustration. The qualifying payment is C$571 above the actual fixed payment. Both gaps reduce household borrowing room.
The renewal tail remains material. About 12% of outstanding mortgages will renew from pandemic-era fixed terms within 12 months. Their payments may rise 15% on average Financial Stability Report.
Mortgage debt exceeded C$2.4 trillion in December 2025. Ninety-day delinquencies rose to 0.24%, from 0.21% a year earlier. Both remain important credit signals.
CMHC Deputy Chief Economist Aled ab Iorwerth said “pockets of significant stress” remained. He pointed to Toronto and Vancouver, even as national arrears stayed low CMHC.
The next scheduled policy decision arrives October 28. Bond pricing can move sooner. Inflation, oil and Friday’s U.S. payrolls report will shape that route.
Risks: Advertised rates can change and may not fit every borrower. A bond rally could narrow the fixed premium. Renewed inflation could instead lift both channels.
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