For Canada's mortgage rates to back off, we need lower inflation

Mortgage rates increased in Canada despite a drop in bond yields. Photo by iStock / Getty Images/iStockphoto

Last Friday’s U.S. jobs report was an epic flop, enough so that America’s five-year yield had its biggest one-day nosedive in a year.

Thanks to cross-border peer pressure, Canadian rates usually follow U.S. yields lower. In this case, at the time of this writing, our five-year government yield is down nine basis points since that fateful event.

Naturally, the reason yields matter is that fixed mortgage rates loosely follow them. So far, however, the only nationally advertised offer showing signs of improvement this week is the uninsured five-year fixed. And it’s down only five basis points to 4.04 per cent.

Meanwhile, the leading default insured five-year fixed is up 10