Fixed-mortgage rates have been falling precipitously in recent weeks, following the yields on five-year bonds which have been dropping since May of last year.

A five-year federal government bond yielded just 1.45% on Monday, its lowest level since the summer of 2017, according to a CBC report. Bond yields are heading lower largely because investors’ prospects for the economy are dim and, consequently, they expect interest rates to start moving lower.

Lower bond yields are generally “not a good sign from an economic standpoint,” said Janine White, vice president of rate comparison website Ratesupermarket.ca, “but it’s great for mortgage borrowers.”

That’s because cheaper financing costs are allowing banks to cut their mortgage rates to try and entice borrowers. The Royal Bank of Canada, for instance, cut its five-year fixed rate to 3.74% in January.

RBC has since cut that rate two more times, first by 10 basis points on March 1 and then by another 15 basis points on March 13. The bank’s five-year fixed rate is now at 3.49%.

TD Bank followed suit, offering a special five-year fixed rate at 3.49%. Smaller lenders are offering even lower rates. Dominion Lending Centres is offering 3.29% locked in for five years, while HSBC Canada currently has a special five-year rate of 3.24%.

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