The Canada 5-year government bond yield is the key benchmark for anyone shopping for a fixed-rate mortgage. Canadian lenders use the 5-year bond yield as a benchmark for their cost of funding: when it moves, 5-year fixed rates tend to follow. Understanding this relationship helps when deciding between fixed and variable and when to take a rate hold. Investors who want the yield itself rather than a mortgage can hold federal bonds directly or through funds; the Government of Canada bonds guide and the ETF guide cover both routes.
Current 5-Year Bond Yield
The 5-year Government of Canada benchmark yield changes every business day, and the Bank of Canada publishes each day’s close on its Canadian bond yields page. As of October 6, 2026, it was 3.59%, against 2.75% a year earlier. Mortgage lenders watch this series closely because it tracks their cost of funding five-year fixed loans.
How the 5-Year Bond Yield Sets Mortgage Rates
Lenders don’t set fixed mortgage rates based on the Bank of Canada overnight rate. They base them on the bond market:
| Component | Value |
|---|---|
| 5-year Government of Canada bond yield | 3.59% (as of October 6, 2026) |
| + Lender spread (yearly averages, 2013-01 to 2026-06) | 1.19 to 1.97 points |
| = Implied 5-year fixed mortgage rate | About 4.78% to 5.56% |
The spread is the gap between the Bank of Canada’s monthly average rate on new uninsured mortgages fixed for 5 years or more and that month’s average 5-year yield. Its yearly average ran from 1.19 points (2022) to 1.97 points (2016); the latest month in the data (2026-06) was 1.29 points.
The spread covers the lender’s operating costs, credit risk, prepayment risk, and profit margin. Competition between lenders compresses it, which is one reason quotes differ between lenders.
Why the Bond Yield Matters More Than the Bank of Canada Rate
| Rate | Affects | Updated |
|---|---|---|
| Bank of Canada overnight rate | Variable mortgage rates, HELOCs, savings rates | At 8 scheduled announcements a year |
| 5-year bond yield | 5-year fixed mortgage rates | Every business day |
The Bank of Canada rate and 5-year bond yield often move in the same direction, but not always. Bond yields reflect market expectations of future rates and can move well before the Bank of Canada actually changes its rate.
Historical 5-Year Bond Yield
| Period | 5-year yield, low to high | Average new uninsured 5-year fixed mortgage rate, low to high |
|---|---|---|
| 2020 | 0.30% to 1.62% | 1.97% to 2.97% |
| 2021 | 0.39% to 1.58% | 1.94% to 2.51% |
| 2022 | 1.39% to 3.84% | 2.61% to 5.22% |
| 2023 | 2.75% to 4.42% | 5.04% to 6.00% |
| 2024 | 2.68% to 3.89% | 4.61% to 5.67% |
| 2025 | 2.50% to 3.28% | 4.24% to 4.61% |
| 2026 year to date | 2.67% to 3.69% | 4.17% to 4.35% |
| 2001 to 2007 | 3.13% to 5.63% (average 4.19%) | Not in this series |
| 2009 to 2019 | 0.48% to 3.20% (average 1.64%) | Series starts 2013 |
Yields are the lowest and highest daily closes of the Bank of Canada’s 5-year benchmark series. Mortgage rates are the Bank of Canada’s monthly average rate on new uninsured mortgages fixed for 5 years or more, the rate actually paid rather than the posted rate; the latest month is 2026-06.
The 2020 to 2021 lows came during the pandemic; the series starts in 2001.
What Moves the 5-Year Bond Yield
| Factor | Effect on Yield |
|---|---|
| Bank of Canada rate hikes | Yield tends to rise |
| Bank of Canada rate cuts | Yield tends to fall |
| Higher inflation expectations | Yield rises |
| Lower inflation expectations | Yield falls |
| Economic growth | Yield rises (less demand for safe bonds) |
| Recession fears | Yield falls (flight to safety) |
| US Treasury yields rising | Canadian yields tend to follow, partly |
| Global uncertainty | Yield falls (demand for safe bonds rises) |
| Government bond issuance | More supply can push yields higher |
Canadian bond yields are heavily influenced by US Treasury yields. The Bank of Canada has noted that Canadian 5-year yields have traditionally imported about two-thirds of any movement in US 5-year yields (Bank of Canada, 2018).
5-Year Bond Yield and Your Mortgage Decision
Fixed vs Variable
| Situation | Bond yield signal |
|---|---|
| 5-year yield falling | Fixed rates tend to follow down, usually with a lag |
| 5-year yield rising | Fixed rates tend to rise, sometimes within days |
| 5-year yield stable | Fixed rates tend to hold steady |
| 5-year yield well above the BoC rate | Variable rates may start lower than fixed |
| 5-year yield close to the BoC rate | Fixed and variable rates tend to be closer together |
Rate Lock Timing
When you get a mortgage pre-approval, most lenders hold the quoted rate for a set period; ask how long. The hold protects you if bond yields rise before you close.
| Bond yield trend | What a rate hold does |
|---|---|
| Falling | Ask whether the lender will give you its lower rate at closing if rates drop; policies vary |
| Rising | A hold keeps the earlier, lower rate |
| Volatile | A hold removes the uncertainty until closing |
Nobody can reliably time the bottom of rates; the fixed vs variable guide covers the trade-offs.
Bond Yield vs Mortgage Rate Spread
The spread between the 5-year bond yield and 5-year fixed mortgage rates reflects lenders’ costs, risk and competition. Measured monthly from 2013-01 to 2026-06, it averaged 1.62 points, with a low of 0.48 points (2022-06) and a high of 2.62 points (2023-12).
| Spread compared with its own history | What it usually means |
|---|---|
| Below its long-run average | Lenders competing hard, or mortgage rates lagging a fast rise in yields |
| Near its average | Typical conditions |
| Above its average | Lenders pricing in more risk, or mortgage rates lagging a fast fall in yields |
The spread swings most when yields move quickly, because posted and offered mortgage rates adjust with a lag. A widening spread can also happen during economic uncertainty even if bond yields are falling.
Where to Track the 5-Year Bond Yield
The Bank of Canada’s daily series is the official close. Financial news sites quote the yield intraday, and lenders adjust their rate sheets after sustained moves.
Related Resources
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.