What Is Happening With Rates Right Now, And If You Have a Variable Rate Mortgage, Should You Lock In?

If you have been paying attention to the news lately, you already know the world feels a little unsettled. A conflict in the Middle East. Oil prices spiking. US tariffs putting pressure on our economy. And last week, something happened in the Canadian bond market that almost never happens.

Let's break it down in plain English.

First, what just happened with fixed mortgage rates

Fixed mortgage rates are not set by the Bank of Canada. They move with Canadian bond yields. And last Friday, Canada's 2-year bond yield jumped 23 basis points in a single day.

In the last 15 years, that has happened exactly once.

That is not a typo. Once. It is an extremely rare move, and it matters because when bond yields spike like that, fixed mortgage rates follow. Quickly. If you have been thinking about locking into a fixed rate and telling yourself you have time to decide, this is your nudge to stop waiting and start talking to someone.

What the Bank of Canada actually did

The Bank of Canada held its overnight rate at 2.25% on March 18th. Bank of Canada That is the third hold in a row. So on the surface, nothing changed.

But underneath that, the picture looks very different. Markets are now pricing in three Bank of Canada rate hikes by December, with the first potentially coming as early as July. Three hikes over nine months would move variable mortgage rates meaningfully higher. We are not talking about pocket change. We are talking about a real, noticeable increase to your monthly payment.

Governor Macklem acknowledged it is too early to fully assess the economic impact of the Middle East conflict CBC News, but the market is not sitting around waiting. It is moving now. And when rate expectations shift this fast and this hard, history tells us the odds of a sudden pivot back to cuts are low. Not impossible. Just not where you would want to put money you cannot afford to lose.

So should you lock in?

We get asked this all the time. And we will be honest with you the same way we would be honest with our own families.

There is no single right answer for everyone. But here is how we would think about it if it were our own mortgage on the table.

If your family budget is tight right now, you have 15 or more years left on your amortization, you do not have a big cushion of savings if payments go up, and there is a decent fixed rate available to you today... we would lock in. Honestly, without a lot of hand-wringing about it.

Here is the reality. The upside of staying variable for most borrowers right now is pretty minimal. If rates hold flat, you save a little. If three hikes land by December, your payment goes up and your breathing room shrinks. That is not a symmetrical risk. It is a bit like driving in a snowstorm and debating whether to slow down. Maybe the roads are fine. But is the risk of being wrong worth it?

Your situation might genuinely be different. If you have a short amortization, strong savings, or your rate environment still makes variable worth holding, that is absolutely a conversation worth having. We are happy to run the numbers with you and tell you honestly what makes sense.

What to do right now

If you are on a variable rate, please do not just sit and watch this unfold. Book a call, walk us through your situation, and we will tell you straight whether locking in is the smart play or whether staying put still makes sense for you.

If you are coming up for renewal, do not sign whatever your lender sends you. We work with 60+ lenders and we get them competing for your business. In an environment where rates could be heading up, that matters even more than usual. Reach out 90 to 120 days before your renewal date if you can.

If you are buying, your rate hold on your pre-approval is your best friend right now. Let's make sure you have one in place while this shakes out.

The next Bank of Canada announcement is April 29th and it comes with a full economic outlook. A lot can happen between now and then.

Our advice is free. A rate move is not.

Never be too shy to call.

289-645-1568 | experts@laframboisemortgage.ca | www.laframboisemortgage.ca