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Mortgage Rates Are Rising Again in Canada. Here's What to Do Before They Climb Further
Fixed mortgage rates in Canada have jumped 30 to 50 basis points in about a month. At the start of 2026 you could find fixed rates around 4%. Today you'll be hard pressed to find anything under 4.5%, and most conventional rates are sitting between 4.7% and 4.9% depending on the lender.
That's the headline from this month's RealtyChatter market update, where Gary McGowan sat down with mortgage broker Dion Beg of Kanga Mortgage to walk through the numbers from Edge Realty Analytics. The short version: rates are rising, Canadians are stretched, rents are softening, and a few cracks are showing in places investors were told were safe. There's also real opportunity in there, if you know where to look.
Why mortgage rates are rising in Canada right now
Start with the bond market, because that's where fixed rates come from. The Government of Canada bond yield is sitting around 3.7%, a four-year high. The last time yields were here was 2022, when fixed mortgage rates were hovering near 6%.
We're nowhere near 6% today. But the direction matters more than the level. When bond yields climb, lenders reprice fixed mortgages within days, and that's exactly what's happened over the last month. Dion's read is that rates stay higher for longer, and nobody should be planning a purchase around fixed rates dropping back to 4% any time soon.
What this means if your mortgage is renewing
If you locked in a fixed rate a few years ago and you're renewing in the next 6 to 12 months, don't wait until the renewal letter shows up. Talk to a broker now about a rate hold. A hold protects you if rates keep climbing, and costs you nothing if they don't.
Is the Bank of Canada going to raise rates?
Variable rates follow a different signal: the Bank of Canada overnight rate, which has sat at 2.25% since last year. It hasn't moved. The pressure is coming from inflation, and anyone who has been to a grocery store lately already knows that.
The forecast on screen from Edge Realty Analytics projects three rate hikes between now and the end of 2027. Even the best-case scenario on that chart shows the overnight rate climbing 0.75%. That increase usually flows straight through to borrowers. Put simply, if you're paying 3% on a variable today, you could be paying around 3.75% down the road if the projection holds.
Governor Tiff Macklem has been clear that the Bank doesn't want to be slow to respond if inflation sticks. Dion calls that the Bank putting its finger on the trigger. Sometimes that kind of warning alone changes how people spend. His take is that it won't this time. An actual hike probably will.
Fixed or variable in a rising rate market?
There's no one-size answer, but the question to ask yourself is simple: could your budget absorb a variable payment that's 0.75% higher than it is today? If the answer is no, the peace of mind of a fixed rate is worth paying for. If the answer is yes, and you have room to breathe, variable can still make sense. This is exactly the conversation to have with a broker before you sign anything.
Canadians are stretched thin, and the arrears data shows it
Two numbers from the report should stop anyone in their tracks. 44% of Canadians say they're financially stressed, and roughly half of Canadians are spending all of their net pay just to keep up. One in two people has nothing left at the end of the month.
Dion talks to people at their limit every day. His point is that a $600 car repair is enough to tip a lot of households over if they don't have a credit card or line of credit to lean on. Homeowners at least have equity they can draw on. Renters in that same position often don't.
Delinquencies are also at a new high, and car loan arrears are now running higher than credit card arrears. Dion explains the usual order people fall behind in: credit cards first, then the car, and only then the mortgage or rent, because shelter is the last thing anyone gives up. When car loans start slipping, mortgage arrears tend to be next in line.
Banks are using AI to recheck old mortgages. That's a good thing
This one was new to Gary too. At least one bank is reportedly going back through mortgages it funded over the last several years, scanning the original documents with AI to flag anything that looks fraudulent: doctored notices of assessment, fake T1 generals, inflated income.
Dion welcomes it, and he has seen why. He has taken calls from people who bought a $1.5 million property with a $1.45 million mortgage arranged by a broker they were referred to, back before insured mortgages were available at that price. That math doesn't work on a legitimate file. Often the borrower had no idea what was submitted on their behalf. The broker got paid. The borrower got a payment they couldn't afford.
He compares it to DNA testing reopening cold cases. The technology now exists to catch the bad actors, and the brokerages that consistently submitted fake documents are going to be flushed out. That protects consumers and the honest people in the industry.
The lesson for borrowers is blunt: if anyone offers to "take care of" your income documents, walk away. The mortgage is in your name. So is the risk.
Canadians are moving to Alberta. Do the lifestyle math too
Interprovincial migration is picking up again. Ontario and Quebec lost about 25,000 people in the latest numbers while Alberta gained roughly 21,000. Gary points out this runs in a cycle every five to seven years, tied to demand in oil, potash and the industries around them in Alberta and Saskatchewan.
Dion has helped clients make that move from Ontario to Alberta, and he has also taken the call a year or two later from the same clients saying it's too cold and they need to come back. Cheaper housing is a real reason to move. It shouldn't be the only one. Factor in your life, not just the spreadsheet.
Rents are softening in Toronto and Vancouver
Population growth has slowed, and rents in Toronto and Vancouver are feeling it. Canada has lost roughly 200,000 people from its population, and about 700,000 more temporary residents are scheduled to leave the country. Fewer renters means less pressure on rents, and Dion expects those numbers to keep sliding.
For investors and anyone counting on a basement suite or rental income to qualify, that matters. Your rental income directly affects what you can afford to carry. Underwrite the rent the market will actually pay today, not the rent you got two years ago.
When "guaranteed rent" condo programs stop guaranteeing
Here's the cautionary tale of the episode. An Ontario investor program, managing roughly 1,800 condo units across 21 buildings with its head office in London, Ontario, told investors it can no longer pay the rent it guaranteed.
The model was straightforward. Buy older apartment buildings, carve them into individual condos, sell those units to investors, and promise a set rent for the first few years. The problem is the math. Tenants were paying about $1,126 a month, while investors had been promised $1,700. Roughly 450 units were sitting vacant, and reserve funds were reportedly drained by special assessments.
As Gary put it, that math doesn't work on a good day.
How to vet a condo investment in a soft rental market
Compare the purchase price to the rent the unit will actually get today, not the guaranteed number.
Read the status certificate and the reserve fund study. Older buildings need more maintenance, and one large project can wipe out a reserve fund fast.
Hire a real estate lawyer who knows condos and can flag upcoming special assessments.
Look at the local market itself. A weak market plus a thin rent guarantee is a bad combination.
New home sales are up 153%. Keep it in perspective
The headline sounds huge: single-family new home sales up 153% year over year. Before anyone gets too excited, remember what it's being compared to. 2025 was one of the slowest years for new home sales on record, so a big jump was always coming.
GTA condo sales tell the same story. They're up 50%, and they're still about a quarter below the long-term average. We're climbing out of a very deep hole. Back to average would be a win.
The good news is the direction. And there's a real incentive on the table: Ontario's 13% HST relief on new homes, which runs to the end of March 2027. Dion's quick math puts the savings close to $100,000 on a million-dollar home. If you've wanted a brand new house or condo, this window deserves a serious look.
What this means for the GTA market this fall
Here's where things land heading into October:
Rates are likely on their way up. Get a pre-approval or rate hold now so you're protected.
Single-family homes in Toronto, Durham, York Region and Peel are still sitting around four months on the market. Buyers have room to negotiate.
Expect a small bump in sales in October. September felt slow because back-to-school pushed everything later, and buyers who were watching softer prices are starting to move.
New construction has a real price advantage while the HST relief lasts.
How to fix your credit and move from a B lender to an A lender
The most useful part of the episode is a real client story. Dion's clients were with a B lender. Their income qualified them for a big bank, but their credit scores were just short, dragged down by credit cards maxed out at their $10,000 limits.
Here's the two-step plan Dion's team put together:
Step 1: Place a temporary private second mortgage behind the existing B mortgage and use it to pay the credit cards down to zero.
Step 2: Wait one to two months while the cards report a zero balance to the credit bureau. Dion expects the scores to jump 50 to 100 points.
Then refinance the B mortgage and the second into one mortgage with an A lender at a better rate.
It isn't overnight, and it takes a plan and someone to walk you through it. But it's how you clean up a file properly so it lands well on the desk of a major bank or Schedule A lender. No fudged documents, no shortcuts.
Talk to someone before you make a move
If you're renewing, buying, or trying to get from a B lender to an A lender, reach out to Dion Beg and his team at Kanga Mortgage or on Instagram at @thedionbeg.
If you're thinking about buying or selling in the GTA, or you want to talk through what these numbers mean for your situation, email Gary McGowan at homes@garyamcgowan.com.
Real estate, in plain English. That's what RealtyChatter is for.
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