The Bank of Canada Hasn’t Raised Rates. So Why Are Mortgage Rates Changing?
Here’s something many homeowners and buyers don’t realize: the Bank of Canada has kept its key interest rate unchanged at 2.25%. Yet fixed mortgage rates have been moving higher in recent weeks.
In fact, the Canadian Real Estate Association’s latest housing report, released October 16, identified rising fixed mortgage rates as one of the factors contributing to slower housing market activity.
So how can mortgage rates increase when the Bank of Canada hasn’t changed its rate?
The Answer Is in the Bond Market
Fixed mortgage rates are influenced by bond yields, which respond to inflation expectations, economic developments, and financial-market conditions. Variable mortgage rates, meanwhile, are generally more directly influenced by the Bank of Canada’s policy rate through lenders’ prime rates.
In other words, mortgage rates can change even when the Bank of Canada does nothing.
Furthermore, Statistics Canada reported that annual inflation reached 3.1% in September, up from 3.0% in August, largely due to higher gasoline prices. These changing economic conditions are important for anyone planning to purchase a home, renew a mortgage, or make their next move.
Here’s a Number That May Surprise You
According to CMHC’s 2026 Mortgage Consumer Survey, 35% of surveyed mortgage renewers experienced increased financial pressure due to interest-rate changes, with their monthly payments rising by an average of $375. That’s a meaningful difference to a household budget.
Three Things Every Homeowner and Buyer Should Consider
- Don’t automatically accept your first mortgage renewal offer.
Comparing lenders, rates, terms, and mortgage flexibility can make a difference. Your existing lender’s first offer isn’t necessarily the most competitive option available. - Thinking about selling or moving?
Before making plans, find out whether your existing mortgage can be transferred to another property or whether an early repayment penalty would apply. These details could significantly influence the financial side of your next move. - Planning to purchase a home?
Understanding what you can comfortably afford each month is just as important as knowing the maximum mortgage amount you qualify for. A smart purchase should fit your financial goals, not just your mortgage approval.
What Does This Mean for Your Real Estate Plans?
With the Bank of Canada’s next interest-rate announcement scheduled for October 28, this is a good time to review your options rather than relying on predictions.
Whether you own a condominium, townhouse, semi-detached, or detached home, financing decisions can influence what makes sense for you. If your mortgage is coming up for renewal, you’re considering buying or selling, or you’re simply curious about what your home could sell for in today’s market, reach out to us today to review your real estate options.
Sources: Bank of Canada; Canadian Real Estate Association, October 16, 2026; CMHC, 2026 Mortgage Consumer Survey; Statistics Canada, October 19, 2026; Financial Consumer Agency of Canada.