There are many various factors that influence the fixed mortgage loan rates in Canada. One thing to keep in mind is that the Canada mortgage rates for a fixed rate loan are impacted by a different set of factors than those affecting an adjustable rate mortgage. So if you are planning to take out a Canadian fixed rate loan, learning more about these influential factors will go a long way to helping you understand one of the biggest debts you will ever have to face in your life.

The main factor that directly impacts fixed rate mortgage loans is the Government of Canada bond yields. The rates of fixed mortgage loans move in conjunction with the government bond yields that come with the same term. There are two very important relationships that you need to learn when it comes to fixed rate mortgage loans and bonds – the relationship between bond prices and bond yields and the relationship between bond yields and fixed rates.

The relationship between bond prices and bond yields is negative. This simply means that when the prices of bonds
increase, bond yields go down. So if the prices of bonds decrease, bond yields go up. Bond prices typically go down when the Canadian market is booming. So in the event that the market is currently dipping, you can expect bond prices to increase, which results in the decrease of bond yields.

So how does this relationship affect Canada mortgage rates for fixed rate loans? Well, in much more simpler terms, when the prices of bonds increase, bond yields go down right? In this case, the fixed mortgage rates also go down. So when the prices of bonds decrease, the bond yields go up, which will then result in the fixed mortgage rates following suit.