Fixed mortgage rates are based on five-year government bond yields. Since the bond market functions like the stock market, a range of economic factors can influence bond prices—and by extension bond yields. These factors include investors’ expectations regarding Canada’s rate of inflation and the Bank of Canada’s benchmark interest rate, the strength of the job market and Canada’s unemployment rate, demand for safe investments over riskier investments, and the federal government’s credit rating (which reflects its ability to repay its debts).