If your mortgage is up for renewal this year, you’re probably hearing a lot of mixed messages — the Bank of Canada paused rate cuts in April after seven in a row, inflation is cooling, and the media is full of “rates could go lower” headlines.

So… should you lock into a fixed rate now, or go variable and hope rates fall even more?

Well, here’s the twist no one talks about enough: even though the Bank of Canada paused, fixed mortgage rates have actually gone up. Yep — bond yields have been creeping higher, and lenders are quietly pricing that in.

Let’s break down what’s going on — and what it means for your mortgage.

Wait… Why Are Fixed Rates Going Up If the BoC Isn’t?

Here’s the quick refresher:

• Variable rates follow the Bank of Canada.
• Fixed rates follow bond yields (which are influenced by inflation expectations, investor confidence, and global market volatility). You can also follow the bond yields here.

So while the BoC hit pause at a 2.75% overnight rate in April, bond yields rose — and that’s caused lenders to bump up their fixed-rate pricing.

• In April 2025, the best insured 3-year fixed rate we could find for an insured mortgage was 3.74%.
• As of late May, that same insured 3-year term is now going for 3.89-3.94%.

On a $500,000 mortgage, that is roughly $53 a month more in payments, with a nominal cost difference of roughly $2900 over 3 years between 3.74% and 3.94%.

Why Bond Yields Are Rising (and Why It Matters)

On the surface, inflation is cooling nicely — headline CPI came in at just 1.7% in April, the lowest in a while. But once you strip out gas prices and food, core inflation is still hovering around 2.9%.

Markets are starting to bet that maybe the BoC won’t be cutting much more this year. That skepticism pushes bond yields up, and rising yields = more expensive fixed mortgage rates. If you pair this with the uncertainty around tariffs, it could push inflation further, depending on what happens at our U.S counterpart.

If you were hoping to time your renewal with the lowest possible fixed rates, that moment might have just passed(for now).

Should You Lock In Now?

There’s a good argument for it.

Fixed rates are still way below where they were a year ago. If you’re up for renewal, locking in a sub-4% rate might give you peace of mind and predictable payments, especially if you’re worried about what inflation might do next.

With fixed rates creeping higher, waiting too long could cost you. I always recommend clients to lock in a rate hold now, and then hang on till closer to their renewal dates to see if lower rates are available. If so, you can still take advantage of the lower rate by having your rate hold ‘floated down’ to the new, lower rates available at that time. What locking in now will do is protect you from any further potential increases.

Or Should You Ride the Variable?

Variable rates haven’t moved in the last month — the BoC held its rate, and lenders haven’t adjusted much. But if the central bank does resume cuts later in 2025 (which many still expect), a variable mortgage could save you money over time.

Just be aware: The BoC could hold longer than expected — or inflation could flare up again. If you don’t have the stomach for rate uncertainty, variable might not be worth the stress.

The Bottom Line

Bond yields don’t care about your renewal date — and neither does your lender. The mortgage market is shifting under our feet, even if central bank policy isn’t.

Here’s where we are right now:

• Fixed rates have quietly gone up about 0.15%-0.20% since April.
• Inflation is slowing, but not enough for markets to feel fully confident.
• If you’re up for renewal, don’t assume rates will just keep dropping — make your move based on what’s happening today, not what you hope happens tomorrow.