How Bond Yields Affect Mortgage Rates in Canada

The 5-year Government of Canada benchmark bond yield closed at 3.35% on November 9, 2026, and the 10-year at 3.63%, in the Bank of Canada’s daily series.

Bank of Canada series BD.CDN.5YR.DQ.YLD, BD.CDN.10YR.DQ.YLD and V80691335 (the 5-year mortgage rate offered by chartered banks).

The two halves of the mortgage market follow different benchmarks. In a November 2024 Bank of Canada speech, Senior Deputy Governor Carolyn Rogers said “Canadian fixed-rate mortgages are generally benchmarked off 5-year government bond yields.” Variable rates are priced off the prime rate, which the Bank of Canada says banks use “as a basis for pricing variable-rate mortgages”; the prime rate page covers prime and how it follows the Bank of Canada.

The 5-year bond yield

The Canada 5-year bond yield was 3.35% at the close on November 9, 2026. It is the yield on the Government of Canada 5-year benchmark bond: the Bank of Canada describes the series as “the prevailing yield for the 5-year maturity point on the Canadian government bond yield curve.” The Bank’s selected benchmark yields are based on mid-market closing yields of Government of Canada bonds that mature in about the stated term.

The two yields on matching dates over three years:

Daily closes, Bank of Canada series BD.CDN.5YR.DQ.YLD and BD.CDN.10YR.DQ.YLD.

The Bank of Canada posts the selected benchmark bond yields on its Canadian bond yields page. How mortgage rates have moved over the years is on the mortgage rate history page.

Why fixed rates follow the yield, and the gap between them

The Bank of Canada says government bond yields “have a big influence on other borrowing rates.” Its explainer on quantitative easing gives the mortgage case: if the Bank bought five-year government bonds and lowered their yield, “this would be reflected in lower interest rates on five-year fixed-rate mortgages.” In a December 2023 staff analytical note on mortgage payments, Bank of Canada staff modelled fixed rates as following financial market expectations for Government of Canada bonds, and variable rates as following expectations for the overnight rate.

A lender’s own cost of money is the main link. The Bank of Canada says a lender’s funding cost “makes up most of the interest rate on your mortgage”, and that the other factors include the lender’s operating costs and the risk that you won’t repay. In her November 2024 speech, Rogers said government-backed mortgage securitization makes funding available to lenders “at rates close to those at which the federal government borrows”; the guide to how mortgage rates are determined covers those programs and the rest of what a lender adds.

The gap between the chartered banks’ posted 5-year rate and the 5-year yield on the same date:

Bank of Canada series V80691335 (weekly) and BD.CDN.5YR.DQ.YLD (daily close). The gap, in percentage points, is our subtraction.

The posted rate is a listed rate, not an average of what borrowers pay. The Bank of Canada says the rates in its posted-rate table are “the most typical of those offered by the six major chartered banks”, based on the statistical mode of the rates they post. Its separate series for mortgages the chartered banks funded is a volume-weighted average for the month: for uninsured mortgages fixed for 5 years and over it was 4.58% in August 2026, and 4.12% for insured ones. The 5-year fixed rates section of the mortgage rates guide compares the posted rate with what borrowers paid.

A fixed rate stays fixed until the mortgage’s next renewal, the Bank of Canada notes. The renewal guide covers shopping at renewal, and the fixed vs variable guide covers the choice between the two.

The 10-year bond yield

The Canada 10-year bond yield was 3.63% at the close on November 9, 2026, against 3.17% on November 7, 2025. The table above shows it beside the 5-year yield. “Canadian fixed-rate mortgages are generally benchmarked off 5-year government bond yields, whereas the US benchmark is the 10-year Treasury,” as Rogers put it in her November 2024 speech. Buying Government of Canada bonds, and what the other terms yield, is on the Government of Canada bonds page.

What moves bond yields

In its Monetary Policy Report of October 2026, the Bank of Canada wrote that long-term yields “reflect expectations for future policy interest rates and term premiums”, the extra compensation investors want for committing money for long periods. Bank of Canada staff write that changes in the term premium can reflect uncertainty about inflation, growth and monetary policy. Changes in long-term yields often follow changes in central banks’ policy rates, a Bank of Canada article says.

In the same report, the Bank said sovereign bond yields had risen across advanced economies, “reflecting higher expected policy interest rates and higher term premiums.” On October 28, 2026, it raised its target for the overnight rate by 25 basis points to 2.50%, and its announcement said advanced economy sovereign bond yields were higher. Bond prices and yields move in opposite directions: buying government bonds raises their price and lowers their return, the Bank explains.

Published bank forecasts for the policy rate and the five-year yield are on the interest rate forecast page.

US rates and Canadian mortgages

A Bank of Canada article says Canadian long-term government bond yields “tend to closely track movements in US Treasury yields”, since global forces heavily influence yields in a small open economy like Canada’s. In a November 2018 speech, Governor Stephen Poloz said Canadian 5-year yields traditionally “import about two-thirds of any movement in US 5-year yields.” The tracking isn’t one for one: in its October 2026 report the Bank wrote that yields in Canada had increased “but by less than in the United States.”

Variable rates connect to the Bank of Canada’s rate rather than the Fed’s: banks price them off prime, and each bank’s prime is influenced by the Bank of Canada’s target for the overnight rate, the Bank says. The two countries’ policy rates and bond yields side by side:

Policy rates: the Bank of Canada’s target for the overnight rate, announced October 28, 2026; the Federal Reserve’s target range for the federal funds rate, in effect from September 17, 2026 and held at the FOMC meeting of October 28, 2026. Yields: closes on November 9, 2026, Bank of Canada series and the US Treasury’s daily par yield curve rates.

On that date the US 5-year yield was 1.32 percentage points above Canada’s, and the US 10-year 1.25 points above. Fed statements are published on federalreserve.gov, and the forecast page sets out published forecasts for the Bank of Canada’s rate.

Where to go next

• Prime rate: each bank’s prime, how it follows the Bank of Canada, and what it means for variable mortgages.
• How mortgage rates are determined: the benchmarks lenders price from, your own application, and what the lender adds on top.
• Mortgage rate history: rates by year and whether today’s rates are high.
• Interest rate forecast: published forecasts side by side, dated.
• Fixed vs variable: how each works and the risks of each.
• Mortgage renewal: the renewal timeline, negotiating and switching lenders.