Canadian lenders are cutting fixed mortgage rates following a drop in bond yields, providing relief to mortgage shoppers. The drop in Government of Canada bond yields, which influence fixed mortgage rates, has led to these rate cuts.

Big Banks and Rate Cuts

Many lenders, including TD, have reduced their rates. Five-year fixed rates are significantly down, and two-year rates might soon hit 4.99%.

Canadian bond yields often follow U.S. trends. Recent comments by the Federal Reserve have boosted market confidence in upcoming rate cuts, causing bond yields to drop.

Implications for Borrowers

This is welcome news for the 2.2 million Canadians with mortgages up for renewal in the next two years. Variable mortgage rates have also dropped by 50 basis points since June, with more cuts expected.

Mortgage Selection Tips

Consider the cost of breaking a high-rate mortgage early. Interest Rate Differential (IRD) penalties can be substantial. For those expecting rates to drop further, more flexible mortgage options are advisable.

Recent data shows a trend towards shorter-term fixed mortgages, with over 50% of new borrowers choosing 3- or 4-year fixed terms. However, variable rates remain an option for those willing to handle potential rate changes.

Always consider the flexibility of your mortgage and potential penalties before making a decision.