Mortgage shoppers who haven’t already locked in could be regretting it as fresh tariff confusion pushes bond yields and fixed mortgage rates higher. While no one will emerge a winner from this convoluted trade war – not investors and certainly not the global economic status quo – the benefit to roiling markets was the downward effect it had on bond yields, which lenders use to determine fixed-rate borrowing costs. In fact, mortgage shoppers enjoyed some of the lowest five-year fixed-rate options since 2022 – in the 3.7-per-cent range – during the early weeks of April, as investors piled into bonds after U.S. President Donald Trump’s “reciprocal tariff” bristol-board presentation. But a number of factors have soured investor faith in these typically haven investments and fixed rates are trending higher. In addition to tariff uncertainty and rising inflation, bond investors have a fresh crop of concerns. For starters, Mr. Trump’s recent threats to fire U.S. Federal Reserve Chair Jerome Powell had a bruising effect on markets, as did threatening the central bank’s political independence. Both put the Fed’s credibility – and the United States’ status as a secure place to invest – at risk. Mr. Trump’s demands that the Fed cut interest rates early also renewed fears of uncontrolled inflation. This, along with the massive stock market slumps in March and April, caused a rout in the U.S. 10-year Treasury bond, spiking yields as investors demanded steeper term premiums to park their cash behind an increasingly volatile U.S. government. While the occasional crack in Mr. Trump’s tariff resolve – such as possibly rolling back the steep 145-per-cent levy on China – temporarily boosted markets, distrust has set a new floor for yields. And when this benchmark American yield rises, so does its Canadian counterpart. The Government of Canada five-year bond yield has steadily edged higher from a low of 2.46 per cent on April 4 to the 2.8-per-cent range. This yield is likely to stay elevated for the foreseeable future thanks to the influence of U.S. yields – Canadian investors are also reacting to the higher deficit pledges unveiled by the two largest political parties ahead of next week’s federal election. As a result, Canadian lenders have wasted no time pulling back the fixed mortgage rate discounts they doled out earlier this month. Since Monday, discounted rates have increased by 10 basis points for some five-year fixed products, and by 15 basis points for three-year terms, and more increases are likely. (A basis point is 1/100th of a percentage point.) While this is a small uptick, every bit counts for today’s mortgage shopper, given interest rates remain 200 to 300 basis points higher than they were during the early years of the pandemic. While the lowest five-year fixed rate in Canada is still 3.79 per cent, this pricing only applies to borrowers with insured mortgages, meaning they’ve paid less than 20 per cent down, with a property purchase price of less than $1-million. That excludes buyers purchasing anything larger than a condo in Canada’s pricier real estate markets. For this group, the most competitive option in Canada is now 4.09 per cent – back above that psychological 4-per-cent threshold. Truthfully, no one knows what’s in store for fixed rates in the short term: bond investors will stay wary as long as the trade narrative remains volatile – anyone telling you otherwise is leading you up the (rose) garden path. In an uncertain rate outlook, a rate hold is your best friend. This is a guarantee offered by a lender that you’ll have access to a specific mortgage rate, usually up to 120 days. If rates fall lower during that time period, the borrower can still access them – but they’ll be protected from any increases during that time period. This is a smart option for anyone taking out a new mortgage, but it also comes in handy for those renewing their terms. As I’ve previously said, it makes more sense to secure yourself lower pricing today – usually by switching to a new lender – than to resign yourself to whatever options are available when your current term matures. Penelope Graham is the director of content at Ratehub.ca.