Fixed Rate Mortgages | Kyle Benzies

When you secure a mortgage you are entering into an enforceable contract with a lender where you're expected to pay back the funds you borrowed (the principal balance), plus interest based on a chosen rate. Generally, you'll have two options to choose from: a fixed rate and a variable rate. In short, a fixed rate is an interest rate that remains constant throughout the term of your mortgage. If you sign on to a fixed rate at 3%, your fixed rate will remain at 3% until your mortgage matures. Fixed rates are a common option for borrowers (especially first-time home buyers) because you know what to expect for mortgage payments throughout your term.

Fixed Rates & Bonds

Fixed rates are highly influenced by the Bank of Canada bond yield and bond yield trends.

Bonds are a low-risk personal investment offered by the banks that you can purchase. The government uses this money to pay off debts and make other investments while you earn periodic interest on it. They'll pay back your principal at the time of maturity.

Bonds can be traded on the bond market (similar to the stock market), and depending on demand it can increase or decrease their value.

Bond prices and their yields are inversely related. If a bond price goes up, the yield goes down and vice-versa.

Banks rely on bonds because they guarantee a minimum rate of return. In order to make a wise investment (lending to you!), it's optimal for lenders to ensure what they lend is equal to or more beneficial than the bonds they hold.

How Does This Affect Fixed Rates?

If the banks notice bond yields are rising, they may attempt to balance out the market by raising fixed rates:

Bond yields increase

Mortgages become less appealing for banks to invest in

Banks raise their fixed rates (to account for what they deem as a less desirable investment compared to the bond market)

As for what fixed rates will be like in 5 years — unfortunately there is no way of 100% knowing. Experts consistently analyze the financial market and produce forecasts, but there are no guarantees. It's important to choose your interest rate based on your unique borrowing situation and seek advice from a licensed mortgage broker.

Benefits of Choosing a Fixed Rate

Fixed rates aren't 'one size fits all.' Everyone's situation is slightly different, but there are a few general guidelines:

Your finances are tight and you can't afford an unexpected interest rate hike if variable rates rise

You're a first-time home buyer who would prefer security instead of risk

You'd like to know upfront how quickly you'll be contributing to your home equity

You have a low loan-to-value ratio (you didn't need to borrow a lot in relation to your home's value)

Considerations of Choosing a Fixed Rate

Not all that shines is gold. Fixed rates do have considerations:

The peace of mind offered by a fixed rate often comes at a premium interest rate, potentially increasing your overall cost of borrowing

If interest rates drop throughout the term of your mortgage, your rate won't follow — you'll be locked in until renewal unless you refinance

Choosing a fixed rate may work brilliantly for you, but a full assessment of your unique borrowing situation is needed. Every borrower has a different lifestyle and goals.

To discuss fixed rates and other mortgage solutions, reach out for a no-obligation call!

The information provided on this page is for educational purposes and should not be implicitly relied upon. Conditions may apply and information may not be 100% up to date. Contact a licensed mortgage professional for the most current conditions and program offerings.

Kyle Benzies, Licensed Mortgage Broker

I'm a licensed mortgage broker serving clients across British Columbia, Alberta, and Ontario. I work with a network of over 100 lenders — banks, credit unions, monoline, and alternative lenders — to find financing that fits each client's situation rather than a single institution's product shelf. Everything I publish here is written to explain how Canadian mortgage lending actually works, in plain language.

Published December 12, 2025

Fixed Rate Mortgages: Benefits, Risks & How They Work in Canada

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Fixed Rates & Bonds

How Does This Affect Fixed Rates?

Benefits of Choosing a Fixed Rate

Considerations of Choosing a Fixed Rate

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