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Five-year fixed mortgage rates are falling as government bonds drop

Aspiring homeowners in Canada may find a glimmer of hope as fixed-mortgage rates experience a decline, following the trajectory of government bond yields. However, despite this positive turn, real estate experts caution that challenges to housing affordability persist.

Victor Tran, a real estate expert from RATESDOTCA, explained that the drop in rates for a five-year fixed mortgage can be attributed to the diminishing yields in the government bond market, which serves as a benchmark for lending rates in the home mortgage sector. Tran noted that this downward trend has been in motion for several months, driven by the market's anticipation of potential central bank interest rate cuts.

"We’ve been on a downward trend on fixed mortgage rates for a few months now," Tran remarked during the interview. He further expressed his expectation that if the current trend persists, there is the likelihood of further reductions in mortgage rates, with variable rates also poised to decrease in the coming year.

While the decline in mortgage rates is seen as a positive development for those aspiring to enter the housing market, Tran emphasized that challenges to affordability remain prevalent. Despite the encouraging trend, potential homebuyers are adopting a cautious approach, waiting for rates to decrease even further before taking decisive actions.

"Rates still remain too high in Canada, and for most people, it’s still too expensive and unattainable to own a home at these levels," Tran cautioned, highlighting the cautious sentiment prevailing among prospective buyers.

Davelle Morrison, a Toronto realtor at Bosley Real Estate, shared similar observations, noting that, as of now, buyers are not rushing to seize the opportunity presented by the lower rates. In her interview with, Morrison mentioned that the majority of buyers are patiently awaiting a more substantial drop in rates before actively engaging in the housing market.

"I haven’t seen buyers jumping at these lower rates yet," Morrison remarked, underscoring the common expectation among potential homebuyers to enter the market when rates are even more favorable.

As the Canadian real estate landscape experiences these shifts in mortgage rates, the ongoing dialogue about housing affordability persists, with stakeholders closely monitoring the market dynamics and potential future adjustments.

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