Once again, fixed mortgage rates are on the rise, with lenders, including major banks, increasing their rates.

Mortgage lenders, including several of the major banks, have been increasing their mortgage rates in the past two weeks. This surge follows a significant rise in the Government of Canada 5-year bond yield, which influences fixed mortgage rate pricing. The bond yield has reached a 14-month high of 3.58%, compared to a recent low of 2.87% earlier this month. Banks such as BMO, CIBC, and RBC have raised their posted fixed mortgage rates, primarily targeting shorter-term options. The popularity of shorter-term mortgages of one to three years has been driven by borrower expectations of rate cuts due to a potential recession and concerns over U.S. debt obligations. These rate hikes are likely to continue, resulting in higher fixed rates overall. Additionally, the surge in overnight spreads, particularly for shorter terms, has raised concerns about stress in the overnight funding markets. This situation could potentially affect liquidity and contribute to an economic downturn.