Rising Bond Yields: What They Mean for Your Mortgage, Car Loan and Savings

Global bond yields have surged to multi‑decade highs, sparking a sharp sell‑off across markets. In Canada, the 10‑year government bond yield climbed to a two‑year high, establishing a new floor for other interest rates.

A bond yield is the annual return investors earn from a bond; when yields rise, the price of existing bonds falls. Because banks often use government bond yields as a benchmark, higher yields tend to lift the rates on mortgages, auto loans and other credit products.

Higher bond yields therefore mean higher borrowing costs for Canadian mortgages and auto loans. Bank of Canada Governor Tiff Macklem warned that inflation fears and government‑debt concerns are driving expectations of further rate hikes.

At the same time, the same rise in yields pushes banks to increase the rates on guaranteed investment certificates (GICs) and money‑market funds, so savers can earn better returns on low‑risk products.

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