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The Bank of Canada held. So why are mortgage rates going up?

On September 2nd, the Bank of Canada held its policy rate at 2.25% for the seventh time in a row.

But fixed mortgage rates have been climbing anyway. The best available 5-year fixed is around 4.39% and trending higher, not lower.

The reason: fixed rates don't follow the Bank of Canada. They follow the 5-year Government of Canada bond yield, and that yield is being pushed up by a global bond selloff, persistent inflation, and oil above $100 a barrel.

And the bigger shift? The conversation has flipped. For most of 2024 and 2025, everyone was asking when the Bank would cut next. Now National Bank and Scotiabank are both forecasting a rate hike by December. The next rate decision is October 28th, and it's going to get a lot more attention than usual.

Meanwhile, the housing market is in a holding pattern. CREA reported that national home sales dipped 0.7% in August, and activity has been essentially flat since May. Ontario's benchmark price is down 3.5% year over year. In Toronto, homes are sitting for 51 days on average, up from 45 in July.

The part that affects the most people: about one-third of Canadian mortgage holders are coming up for renewal this year. Most hold 5-year fixed mortgages locked in at pandemic-era lows, and payment increases are expected to average around 20%.

That doesn't mean the sky is falling. It means the math is changing, and it's worth knowing where you stand before your renewal date shows up.

If you're buying, the flat market and rising days on market mean you have more time and more room to negotiate than you've had in years. If you're selling, pricing for this market (not the one from 2022) is the difference between moving and sitting. And if you're renewing, "wait for fixed rates to fall" is a weaker bet than it's been at any point this cycle.

Curious what this means for your situation? Reach out and we'll walk through it.

Talk soon,
CHRIS, PATRIC, JULIE, JASMINE, KRISTI & BRELL

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