Numerous lenders, including two big banks, continued to raise fixed mortgage rates this week, and more hikes could be on the way as short-term bond yields hit a 15-year high.

Bond yields—which typically lead fixed mortgage rates—have sharply over the past couple of week. The biggest moves this week were seen in the 2- and 3-year Government of Canada bond yields, which rose to levels last seen during the Financial Crisis of 2007-08.

Among the Big 6 banks, BMO this week hiked its 3- and 5-year posted fixed rates by 20 bps (0.20%), while CIBC raised its 5-year insured (high-ratio) rate by 10 bps. The moves follow increases by National Bank and RBC last week.

In a tweet, Ron Butler of Butler Mortgage suggested another 15-20 bps worth of fixed-rate hikes could flow through from lenders and brokerages by Monday.

In his weekly blog post, Integrated Mortgage Planners broker Dave Larock noted that bond yields have risen by roughly 50 bps (0.50%) in recent weeks, while fixed mortgage rates have so far risen less than that.

“[That] leads me to believe that additional fixed-rate increases could be in the offing to close the gap,” he wrote.

Mortgage arrears remains unchanged in March

Canada’s national mortgage arrears rate remained unchanged just off its all-time low in March, according to data from the Canadian Bankers Association.

The arrears rate, which tracks mortgages that are behind payments by three months or more, was unchanged at 0.15% in the month. That’s up just a tick from the all-time low of 0.14%.

The latest results work out to just over 7,600 mortgages in arrears out of a total of nearly 5.1 million. The rate is highest in Saskatchewan (0.60%) and Alberta (0.35%), and lowest in Ontario (0.07%), British Columbia (0.11%) and Quebec (0.11%).

This is well below the highs seen during the pandemic, when the arrears rate reached a peak of 0.27% in June 2020.

Positive real estate outlook pushes consumer confidence to a 2023 high

A positive outlook on the housing market has driven consumer confidence to its highest level this year, according to a weekly survey by Bloomberg and Nanos.

The Bloomberg Nanos Canadian Confidence Index (BNCCI) rose to 50.12 up from 52.45 last month and a 2023 low of 45.33 in January

“Sentiment on real estate continues to fuel the current positive trajectory,” noted Nik Nanos, Chief Data Scientist.

Over 47% of consumers expect real estate values to rise in their neighbourhoods (up from 37% a month ago), while nearly 35% expect them to remain the same (down from 41%) and 14.5% expect a decrease (down from 18%).