THE BANK OF CANADA HELD RATES… SO WHY ARE FIXED MORTGAGE RATES RISING?
By Stuart Lessels, Your “Go To” Mortgage Broker for Georgian Bay and Beyond
If you’ve been watching the news, you probably saw the headline:
“Bank of Canada holds the overnight rate at 2.25%.”
And if you’re like most people, you probably thought:
“Great! That means mortgage rates won’t go up… right?”
I wish it worked that way. I really do. But here’s the part the headlines don’t explain — and the part that actually matters for your mortgage:
Fixed mortgage rates don’t follow the Bank of Canada.
They follow something much more boring… Something your parents probably talked about at the dinner table… Something you might have ignored because it sounded like “grown‑up money talk.”
Bonds.
Yes — those safe, steady, “boring” investments your parents loved.
And right now?Bond yields are rising. Which means fixed mortgage rates are rising, even though the Bank of Canada didn’t touch its rate.
Let’s break this down in plain English — no jargon, no corporate speak, just the truth you need to make smart decisions.
⭐ Why the Bank of Canada Held Rates This Week
On March 18, 2026, the Bank of Canada kept the overnight rate at 2.25%.
Why?
Because the economy is soft:
- GDP shrank last quarter
- Unemployment is up
- Exports are weak
- The labour market is cooling
- Consumers are slowing down
At the same time, inflation has been easing — down to 1.8% in February — but rising energy prices are expected to push it back up.
So the Bank of Canada is stuck between:
- Weak growth
- Higher energy‑driven inflation
- Global uncertainty
Holding the rate was the safest move.
But here’s the twist…
⭐ If the Bank held rates, why are fixed mortgage rates rising?
Because fixed mortgage rates don’t follow the Bank of Canada.
They follow bond yields.
And bond yields are rising because:
1. Global conflict is pushing energy prices up
Oil and natural gas prices have jumped. Gasoline is more expensive. Shipping costs are rising. This increases inflation expectations.
2. Investors want higher returns
When the world feels risky, investors demand more return for their money. Higher risk = higher yields.
3. Global bond markets are tightening
Bond yields in the U.S. and Europe are rising. Canada follows.
4. Financial markets are nervous
Equity markets are down. Credit spreads are wider. Money is moving into safer assets — and that pushes yields up.
5. Rising yields = rising fixed mortgage rates
This is the part most people don’t know.
When bond yields rise, fixed mortgage rates rise. It’s that simple.
⭐ So what does this mean for you?
If you’re renewing in the next 12–18 months
This is your moment to get ahead of it. You don’t have to wait for your renewal letter. You can build a plan now — for free.
If you’re buying
Fixed rates may continue to rise if bond yields keep climbing. A pre‑approval protects you.
If you’re in a variable rate
Your payment isn’t affected by this announcement — but your fixed‑rate conversion options might be.
If you’re feeling overwhelmed
You’re not alone. This stuff is confusing — and that’s why I’m here.
I work with over 260 lenders, and my job is to help you find the best fit, even if it ends up being your current bank.
⭐ The simple takeaway
The Bank of Canada held rates. But fixed mortgage rates are rising because bond yields are rising.
It’s not you. It’s not your bank. It’s not the news. It’s the bond market — the quiet engine behind fixed mortgage rates.
And now you know.
If you want a free plan for your renewal, your purchase, or just to understand your options, I’m here.
Stuart Lessels
Your “Go To” Mortgage Broker for Georgian Bay and beyond
📞 (705) 445‑1234