Find the Best 6-month Fixed Closed Mortgage Rates in Canada

What is a 6-month fixed closed mortgage rate?

A 6-month fixed closed mortgage rate, while being the least flexible rate, can offer peace of mind to the borrower. It allows you to lock in a mortgage rate so that it remains unchanged during the 6-month term and offers a fixed payment schedule that does not fluctuate.

Open vs. Closed mortgages

Open mortgages are flexible and often work for shorter-term loans. Generally, rates are higher in open mortgages because you are paying for the flexibility of payment and refinancing without penalties for early full payment.

Closed mortgages offer less flexibility than open mortgages. As a result, the interest rates are lower than closed rates but there is no possibility for refinancing, early payment or full payment without being charged extra fees. Closed mortgages also provide peace of mind with stable, fixed payment schedules that allow borrowers to budget accordingly based on their financial situations.

What causes changes in 6-month fixed closed rates?

As the Bank of Canada changes its overnight lending rates to banks, banks and other mortgage lenders adjust their rates accordingly. Recently, interest rates have been on the rise and so 6-month fixed closed rates have also risen since last spring. 

The sensitivity to the Bank of Canada’s decisions goes both ways as rates can come down if and when inflation is eased, and interest rates start heading lower. Bank of Canada's overnight lending rate can influence the yield on Treasury bill, in turn affecting mortgage rates. While Treasury bill yields can provide insight into the direction of interest rates, it is not the only fact that impacts mortgage rates. In Canada, the yield on government bonds, particularly long-term bonds, is often used as a benchmark for setting mortgage rates. When the yield on government bonds rises, mortgage rates may also rise, and when the yield on government bonds falls, mortgage rates may also fall.
Treasury bills are short-term debt securities issued by the Government of Canada, and their yields can influence the interest rates for mortgages, which are longer-term loans.

When Treasury bill yields rise, it generally means that investors are demanding a higher return for lending money to the government, and this can lead to an increase in interest rates for other types of loans, including mortgages. On the other hand, when yields fall, it generally leads to a decrease in interest rates for mortgages.

6-month fixed closed rate predictions

It’s difficult to predict how the Bank of Canada will stand on interest rates in the near future but a lot depends on what the state of inflation, and overall economic picture.

Most economists see perhaps one more rate hike as inflation has peaked and started to abate on a global scale. Should this occur, rates will eventually come down and 6-month fixed closed mortgage rates would come down with it. The good news for borrowers is that 6 months is a short-term loan and should rates fall they would be able to take advantage of better refinancing options sooner rather than later.