For about a year, the mortgage story in Canada was a quiet one: the Bank of Canada held steady, prime didn’t move, and most homeowners could set their renewal or purchase plans on autopilot. That changed at the end of October. At the same time, the Greater Toronto Area housing market is sending signals that look very different from the headlines about rising rates.
This guide walks through what actually changed, how it affects different types of mortgages, what’s happening on the ground across the GTA, and how homeowners, buyers and investors can position themselves before the next rate decision on December 9.
What Happened on October 28, and Why It Matters
On October 28, the Bank of Canada increased its overnight policy rate by a quarter point, from 2.25% to 2.50%. It was the Bank’s first increase since July 2023 and its first move of any kind in a year. Canada’s largest banks, including RBC, TD, CIBC and BMO, raised their prime rates from 4.45% to 4.70%, effective October 29.
The reason is inflation. Consumer prices rose 3.1% over the year to September, driven largely by gasoline and energy costs tied to the conflict in the Middle East. Excluding gasoline, inflation was a more modest 2.2%, but the Bank is worried that high energy costs will spread into the prices of other goods and services. It now expects inflation to average about 3.1% in 2027, well above its 2% target and up sharply from its July forecast.
Just as important as the hike itself was the message that came with it. The Bank said it could need to raise rates further, but that given the uncertainty around energy prices and trade with the United States, it will proceed carefully. In other words, another increase is possible, but it isn’t locked in.
Variable and Fixed Rates Are Telling Two Different Stories
One of the most common misconceptions we hear is that every mortgage rate moves when the Bank of Canada moves. In reality, variable and fixed rates are driven by different forces, and right now they’re behaving differently.
Variable rates and home equity lines of credit are priced off your lender’s prime rate, so they change almost immediately after a Bank of Canada decision. How that shows up depends on your mortgage:
Adjustable-payment variable: your payment changes with prime. On a 25-year amortization, the October increase adds roughly $14 a month for every $100,000 you owe. On an $800,000 mortgage, that’s about $112 a month, or roughly $1,340 a year.
Fixed-payment variable: your payment stays the same, but more of it goes to interest and less to your principal. If rates keep rising, some lenders may eventually require a higher payment.
Home equity lines of credit: interest-only minimum payments rise right away with prime.
Fixed rates are a different story. Lenders price them off Government of Canada bond yields, mainly the 5-year bond, and bond markets move ahead of the Bank of Canada based on where investors expect rates and inflation to go. That’s why fixed rates started climbing well before October 28. The 5-year bond yield reached a one-year high near 3.73% in late September, and all six of Canada’s largest banks raised some of their fixed rates through September and October.
Between now and December 9, the data most likely to move both the Bank and the bond market includes the October inflation report (released November 16), the monthly jobs numbers, oil prices, and progress in Canada–U.S. trade talks.
Inside the GTA Market: Where the Opportunities Are
While borrowing costs have moved up, home prices across the GTA have moved the other way. According to the Toronto Regional Real Estate Board, there were 5,040 sales in September, down 9% from a year earlier, and the average selling price was $1,006,409, about 5% lower. The benchmark price for a typical home fell 4.7% year over year to $917,600.
The declines have been broadest in higher-density housing. TRREB’s September benchmark prices by property type:
Detached: $1,196,400, down 4.8%
Townhouse: $668,800, down 6.5%
Condo apartment: $527,200, down 6.7%
And across the regions:
York Region: $1,080,400, down 6.5% (Markham: $1,052,500, down 6.0%)
Halton Region: $953,100, down 3.4%
Peel Region: $864,300, down 4.8%
Durham Region: $805,600, down 5.2%
Two other trends are worth watching. First, new condo construction in the City of Toronto has nearly stopped. Developers broke ground on just 156 condo units in the first half of 2026, according to CMHC, while rental apartment starts rose 82%. With so few condos being started today, there will be far fewer completions a few years from now.
Second, large investors are moving in. In the third quarter, investment groups bought 339 unsold new condos across the Toronto and Hamilton area in bulk, nearly half of all new condo sales, at an average of about $763 per square foot, roughly 40% below the original selling prices in those buildings (Urbanation). Individual buyers paid closer to $1,033 per square foot.
What does that mean for you? Buyers have more negotiating room than they’ve had in years, on price, conditions and closing dates, particularly in resale condos and townhomes. But that window may not stay open. New listings in September were down 14.4% from a year earlier, so supply is already starting to tighten.
Short on time? Book a free 30-minute Discovery Call and we’ll look at what this market means for your plans.
Strategy 1: Use a Rate Hold as Insurance
If you expect to buy or renew in the next few months, a rate hold is one of the simplest ways to manage rate risk. When you get pre-approved, or apply for an early renewal, many lenders will guarantee a rate for up to 120 days. If rates rise during that time, you keep the lower rate. If rates fall, many lenders will let you take the lower rate instead.
A few things to know: hold periods and terms vary by lender, a pre-approval isn’t a final approval, and the hold only protects you if your deal closes within the window. That makes timing important. Starting the conversation three to four months before you need the money gives you the most protection.
Strategy 2: Weigh a 2- or 3-Year Fixed Term
The 5-year fixed has long been Canada’s default mortgage, but it isn’t the only option. A 2- or 3-year fixed term gives you a predictable payment now while getting you back to the renewal table sooner. If rates ease over the next couple of years, you’ll be able to take advantage earlier.
The trade-offs are real, though. A shorter term means facing renewal again sooner, and rates could be higher, not lower, when that time comes. Shorter-term rates can also be priced above or below 5-year rates depending on the market. The right term depends on how long you plan to stay in the home, your comfort with payment changes, and whether you expect to refinance or sell.
Strategy 3: Start Your 2027 Renewal Review Now
If your mortgage renews in 2027, the best time to start planning is well before your lender’s renewal letter arrives. An early review gives you time to compare options instead of simply accepting the first offer. It’s worth gathering:
Your renewal date and remaining balance, from your annual mortgage statement
Your current rate, term and any prepayment privileges
A list of other debts and their interest rates, such as car loans, lines of credit and credit cards
Your goals: lowering your payment, renovating, helping family, or buying an investment property
Your renewal is also a natural moment to restructure. Many homeowners can borrow up to 80% of their home’s value through a refinance, which can fund a renovation, a down payment on a rental, or the consolidation of higher-interest debt into one payment. If your mortgage is insured, you can switch lenders at renewal without re-qualifying under the stress test. If it isn’t, a new lender may require you to re-qualify, so it pays to know where you stand early.
How We Can Help
Every household’s situation is different, and the right move depends on your mortgage, your goals and your timeline. In a free, no-pressure 30-minute Discovery Call, we can:
Show you what your payment looks like at today’s rates, and if they rise again in December
Compare a rate hold, a shorter fixed term and a variable rate for your situation
Map out your options if you’re buying, renewing, refinancing or investing in the next year
Ready to talk? Book your 30-Minute Mortgage Discovery Call, or send me a message with your question or renewal date.
Sources: Bank of Canada; RBC, TD, CIBC and BMO prime rate announcements; Statistics Canada; Toronto Regional Real Estate Board (TRREB) Market Watch and MLS® HPI, September 2026; CMHC Housing Supply Report, Fall 2026; Urbanation Q3 2026 Condominium Market Survey.
Dominic Mascoll, Mortgage Agent Level 2 (FSRA Licence M08006540), Seventy Seven Park, Brokerage Licence 13004. This article is general information, not financial advice. All mortgages are subject to lender approval. Rates, terms and lender policies change and vary by lender.