Fixed Mortgage Rates Decline as Variable Rates Remain Elevated

The Bank of Canada's decision to keep the prime rate at its current level for the next few months or quarters has resulted in variable mortgage rates remaining at 22-year highs.

Meanwhile, fixed mortgage rates are declining, moving in line with market expectations of future rates as reflected in falling bond yields over the past three months.

This week saw an improvement of 10-20 basis points in four-year and 10-year fixed rates, but the most popular rates remain one-year and two-year fixed rates, driven by rate-cut expectations and the high cost of variable rates.

Two-year fixed rates are expected to decline faster due to a higher likelihood of rate cuts in the next two years. Buyers & Sellers seeking a short-term rate drop should monitor Canada's two-year bond yield. A decline in this yield is an indicator of lower short-term fixed rates to come.