Prime Rate Remains As Is, but Fixed Rates are on the Move

Yesterday the Bank of Canada announced that it will be holding its policy rate steady — and if that’s all you heard on the news, you’d be forgiven for thinking mortgage rates are in a holding pattern. They’re not. At least, not all of them.

What the Bank of Canada Actually Said Today

The Bank of Canada held its overnight rate steady at 2.25%, the same level it’s held since October 2025. That keeps the prime rate at 4.45%, which is what directly drives the cost of variable-rate mortgages, HELOCs, and prime-linked lines of credit.

The Bank’s statement pointed to a Canadian economy that picked up meaningfully in the second quarter — 3.3% growth, with unemployment edging down to 6.4% in July — while flagging real uncertainty ahead, largely tied to new US tariffs and elevated oil prices. Bottom line from the Bank: no change today, and no strong signal of an imminent move either direction.

What about Fixed Rates?

Fixed-rate mortgages run on an entirely separate track. Lenders price them off the bond market, specifically Government of Canada bond yields, which move based on global investor demand — not on what the Bank of Canada decides at any single meeting.

And right now, that bond market is doing something the overnight rate isn’t: moving, quickly, and in one direction.

What’s Driving the Global Bond Sell-Off Right Now

This isn’t a Canada-only story, which is exactly why it’s worth paying attention to. Bloomberg calculates that average government bond yields across the G7 economies have climbed to their highest level since 2000. A few specific signals worth knowing about:

• The UK’s 30-year government bond yield just hit its highest point since 1998.
• Japan’s 10-year government bond yield broke above 3% for the first time since 1996, amid reports the government plans to expand its budget while cutting taxes — with some speculation the Bank of Japan may raise its own rates to support the yen.
• France’s 10-year bond yield is near its highest level since 2008, largely on concerns about the sustainability of government borrowing.
• In the US, Treasury yields are pushing back up near the highest levels since 2007, and trading odds now put almost a 70% chance on a Federal Reserve rate hike at its next meeting — nearly double where those odds sat just a week earlier.

G20 finance ministers are meeting this week specifically to discuss the bond market environment. And the Bank of Canada’s own statement today acknowledged the trend directly, noting that financial conditions have tightened since July and that long-term bond yields have moved up globally, including here in Canada.

When bond yields rise, borrowing costs for governments, businesses, and mortgage holders tend to move in the same direction — and that’s playing out globally right now, independent of any single central bank’s own meeting schedule.

What This Means If Your Mortgage Is Maturing in the Next 9–12 Months

If you have a renewal coming up in that window, this is worth a conversation now rather than closer to your maturity date. If fixed rates continue climbing over the coming weeks, waiting to shop your renewal could mean locking in materially higher than what’s available today. It costs nothing to review your options early — see my breakdown from a previous blog on mortgage maturity, transfers, and the open conversion for what your choices actually look like as a renewal approaches.

What This Means If You’re Planning to Buy

If you’re sitting on the sidelines hoping prices soften a bit more in a market that’s honestly mixed right now — some regions slumping, others fairly flat — run this comparison before assuming waiting is the safer move. A modest price/market pullback can look appealing on paper. But if fixed rates climb a moderate amount while you wait, the added interest cost over the life of the mortgage can end up outweighing what you saved on price. It’s not automatic, and every scenario is different, but it’s exactly the kind of math worth running with real numbers — including how a rate move would affect your stress test qualifying rate — before deciding to sit tight.