10/06/2026
Fixed mortgage rates in Canada have been creeping up this fall, and most people haven't noticed. The Bank of Canada held its policy rate at 2.25% on September 2, its seventh straight hold. But in that same announcement, the Bank pointed out that long-term bond yields have risen, both in Canada and globally. That matters, because bond yields, not the Bank of Canada, are what drive fixed mortgage rates.
In mid-September, the lowest insured five-year fixed rate in Canada was about 4.09%. A week later, it was about 4.24%. That's a small move. But with inflation at 3% in July, high oil prices, and new tariffs on both sides of the border, a rate increase is back in the conversation. The Bank's next two announcements are October 28 and December 9.
I'm not writing this to tell anyone to rush out and buy or sell. Nobody knows for certain what rates will do. But I've found that most buyers and sellers don't fully understand how rate changes affect them, so here's the math.
Buyers shop by payment, not price
Most people know the monthly payment they're comfortable with. So the more useful question is: what does that payment buy as rates change?
Take a $400,000 home with 10% down. Add mortgage default insurance, and the mortgage is about $371,000, amortized over 25 years. At 4.24%, the monthly payment is about $2,001.
Now hold that $2,001 payment steady:
- At 4.24%, it buys a $400,000 home
- Up a quarter point (4.49%), it buys about $390,000
- Up half a point (4.74%), about $380,000
- Up a full point (5.24%), about $362,000
That's roughly $10,000 in buying power for every quarter point, and almost $40,000 for a full point. At higher price points, the numbers grow.
The stress test raises the bar too
Lenders qualify borrowers at their contract rate plus 2%, or 5.25%, whichever is higher. When rates rise, the qualifying bar rises with them. First-time buyers with stretched budgets feel this the most. A price range that worked in the spring may not work by winter.
A rate hold is the simplest protection
Most lenders will hold a pre-approved rate for 90 to 120 days, and a few go up to 130. It's free, and with many lenders, if rates fall during the hold, you can ask for the lower rate. The key is that it has to be a full pre-approval with a credit check. An online pre-qualification won't hold anything. Anyone planning to buy in the next four months should be asking their lender about this now.
Sellers are affected too
Even sellers who aren't borrowing are exposed, because their buyers are. When every buyer can afford a little less, fewer people qualify at a given price. That doesn't guarantee lower prices, and I won't predict that. But less buying power can mean more negotiation and more time on the market.
This is especially worth noting for downsizers. Many are buying their next home with cash or significant equity, so rates barely affect their purchase. But the buyer for the home they're selling is likely financing, so that buyer's rate still matters.
The bottom line
Rates might hold. They might rise. What matters is understanding what each move could mean before it happens, not after.
I walk through all of this in more detail in my latest video, 5 Things Nobody Tells You About Rising Interest Rates: https://youtu.be/J65Y68EAXFs
The full breakdown, with the numbers, is on my blog: https://www.lindahakrrealtor.ca/5-things-nobody-tells-you-about-rising-interest-rates-what-buyers-and-sellers-in-ontario-need-to-know/
If you're thinking about buying or selling in Leamington, Kingsville, Wheatley, or anywhere in Windsor-Essex or Chatham-Kent, I'm always happy to talk it through.
Cheers,
Linda Hakr, REALTOR®
JUMP Realty Inc.
Estimates assume a $400,000 home, 10% down, mortgage insurance added, and a 25-year amortization, using rates from late September 2026. Individual numbers will vary. This article is for general information and isn't financial advice.
