By Paul Rayburn July 15, 2025
Earlier Today Brendon Ogmundson, CFA Chief Economist at BC Real Estate Association made a another post on LinkedIn with further emphasis on the 5-year bond yield rising back above 3%. You can read yesterdays post here.
So, is a 3 %+ five‑year bond yield the psychological trip‑wire for Canadian borrowers? Why is this so important right now?
For those in the lending industry now is the time to get your best practices in place and I may have a few recommendations, so please read on and stay connected.
Remember that about two‑thirds of Canadian mortgages come due every five years. That’s why Brendon’s point about the 5‑year GoC yield popping above 3 % matters so much here.
The first pandemic‑era 5‑year terms (funded in Q2 2020) hit lenders’ 120‑ to 180‑day “no‑penalty” windows this summer and I have already been seeing these affects.
There will also be some overlapping maturities from the 2020 five‑years plus a big block of 3‑year loans written in late 2022 driving renewal volume up a ballpark 25‑30 % above “normal” through Q4 2025.
The real “wall” comes in Q1 2026, when 2021’s record‑setting 5‑year cohort renews. Mortgage brokers, appraisal and underwriting teams should brace for the busiest quarter of the next 18 month cycle.
There may also be a bit of a psychology shift resulting from the 2022‑23 rate shock from the bad “low for long” advice, some borrowers will likely look to 5‑year fixed terms. Every uptick in the bond yield nudges recommendations to lock in early, pulling some 2026 business forward.
It’s a live experiment in how rapid rate resets ripple through household cash‑flow and housing turnover, something the U.S. mortgage holders generally avoid thanks to long‑term fixed loans.
Bottom line: A 3 %+ five‑year yield may be a psychological trip‑wire for a share of Canadian borrowers. Watch for refinancing volumes, and the collateral checks that come with them, to accelerate from late‑summer 2025 and crest in early 2026.
How to avoid issues when an appraisal is required to ensure an overall positive experience.
I have a number of suggestions to avoid unnecessary delays during peak demand when it comes to getting a full appraisal and a few bonus points to help ensure an overall positive experience for lenders, brokers and their clients that deserve the best from everyone in the loop, the end consumer.
1. I don’t know how many times this needs to be repeated but, please ensure the contact information is correct and if possible provide an alternative(s).
2. If there are recent significant renovations particularly the addition of suites, which is a common upgrade over the past 5 years, ask your borrower to have a copy of the permits available to provide to the appraiser. Get on this early and don’t leave it to the last minute. This is also extremely important if a market rent report is to be a part of the assignment. You can read a bit about the market rent issue on one of my prior posts here.
3. I’ve seen a mix of opinions about what homeowners should do to prepare for the appraiser’s site visit. I pride myself on being able to see through a bit of a mess. That’s both from a personal experience of seeing what the mere suggestion of having guests come over does for the tidiness of our home, and what I have seen from viewing homes prior to a listing and then seeing the MLS photos posted a few days later. Sometimes miraculous what a few minutes or maybe a few hours of elbow grease can achieve.
I’ve seen some suggest online in canned AI generated posts to have the home showing in its best light. In a perfect world wouldn’t that be nice. When we are doing a viewing for a refi, I don’t feel that people need to turn their lives upside down. I can see through a scattering of socks and crumbs on the counter, even a few minor scuffs in the paint, and I think most experts would be of the same mind when it comes down to it. Could an AI generated analysis do the same? I’m not sure, but that’s another topic. For the typical scenario, as long as we can see the majority of surfaces and there are no obvious attempts to obscure defects I wouldn’t lose any sleep.
4. Ensure the appraiser will have full access to the property and that any tenants are properly notified.
5. If recent significant upgrades or renovations have been completed, providing copies of invoices or a reasonably detailed tally of the expenses will often be requested. Appraiser’s are constantly gathering data and this request is not the lack of an appraiser having an idea of the cost or value, that is simply how we stay abreast of markets. For any new construction don’t be surprised if the appraiser will not proceed without the information, particularly for significant construction projects. The appraiser should have a good handle on market values and should be able to determine if those costs are fully contributing or not. In some cases market value impact can exceed costs and sometimes it may not. If you have reason to believe your upgrades exceed cost and hope to benefit from that, don’t be afraid to state your reasons or examples that you may have observed that led to your decisions to proceed with the upgrades. For major projects it wouldn’t hurt to get an appraisers insights before executing a project. It may come in handy when it comes time to get that final cash out refi, if that’s your goal or it may save some surprises if it truly is not a value add project.
6. If you have a unique property and you want to make sure a proper analysis is completed, it could be best to deal with a mortgage broker who knows the market and knows how to get the order assigned to an appraiser who is willing to put in the extra effort to develop a report that is both defendable for the appraiser, but also helps orient the examples used to suit how lenders look at the reported data.
As an example, for an expert witness case I will probably include several or a dozen or more sale data points into the graphic insights and it could be that the very best comparable sale was several years ago, which could very well be the subject. That will likely be provided in a narrative report format. Most lenders A. do not have the capacity to deal with that kind of report and B. discourage any comp that old and typically shy away from using the subject as a data point. Of course, their actual underwriting decisions are not shared so it’s a bit of an unknown but they generally make it clear they want the most recent and least adjusted comps. How the appraiser gets comfortable with the scope of work and their confidence in the workfile to defend their decisions can be a significant portion of the appraiser’s due diligence and confidence to stand behind their work and sign on that dotted line.
Going the extra mile may mean providing at least one nearby comp, one recent comp and a couple more to help tie the relationships together in a reasonably comprehensive format. That may require doing an in-depth analysis of a nearby market to find recent examples that support the subject market value that could be derived from that additional historical detailed analysis. Doing that comprehensive of an analysis takes significant extra effort that the cheapest and fasted appraiser was probably not planning on providing and may end up faced with decisions to cut corners to meet those objectives of cheap and fast or not.
7. It could help everyone in the chain to understand a transition has been occurring in the market that could cause some frustration, particularly for those who haven’t shopped an appraisal for the past 5 years. AVMs have been improving, and increasing in their use and acceptance by lenders. What this means is that if your property has been assigned to an appraisal that is likely because the AVM results were not considered reliable enough for the property and loan type. That is probably an indication the property may be somewhat more complex.
There is no question among appraisers, other industry experts and advocates, that this has been occurring. Historically, I know myself and other peers have indicated that they were previously able to absorb the odd complex assignment, effectively subsidized by the simpler assignments and not necessarily require a fee increase, or if so, a modest increase may have been applied. That has shifted significantly now that the majority of assignments are the more complex. Never mind that the focus by lenders, brokers and their agents is typically to try to find the cheapest appraiser. As a result, base fee expectations have been largely stagnant for a decade. Unfortunately, that fee must get absorbed. Appraisers can only do so much, if the lenders and their agents are unwilling to accept this, the quantity and supply of appraisers will not be able to meet demand. Turn around times are equally impacted and expectations for TATs should also be tempered.
The next peak in demand is coming. It’s time to start building up your networks and setting the stage for success. If all you have to offer is the lowest prices, you are likely a commodity. As with anything there is a balance and at least being aware of some key concerns can help improve the overall experience.
This post focused on lender work as that is the subject of the impacts of the 5-year bond yield on consumer anticipation. How does this all play out in the non-lending field of appraisal work? Certainly, the rise in demand on appraiser availability should be considered. I have spent the better part of a decade with the goal in mind of expanding my focus to include more demanding assignments, for clients who appreciate the extra attention to detail. Having focused on the more complex assignments intentionally, I will continue to build up those clients who have higher expectations. Again, this is the perfect time to start making those connections and I look forward to tackling the future head on.
After several weeks of being focused on running the day to day, and actually being busy with the initial bouts of the coming renewal wave as discussed above, I have a few posts I’m looking forward to share over the coming days and weeks. Thanks for reading this far today and as always feel free to reach out anytime. I look forward to continuing to build relationships with my peers and other valuation industry professionals.