Updated September 2026
Interest rates are back in the spotlight for Canadian homeowners.
The Bank of Canada held its policy interest rate at 2.25% on September 2, 2026, continuing a period of unchanged rates. But the conversation around what comes next has shifted.
Recent market expectations have increasingly reflected the possibility that the Bank could raise rates in the months ahead. Higher energy prices, inflation concerns, tariffs, and changing global financial conditions have all contributed to renewed uncertainty.
For Ontario homeowners, the important point is not to try to predict the Bank of Canada’s next decision.
It is to understand how changing interest-rate conditions could affect your mortgage, particularly if you have a variable-rate mortgage, are approaching renewal, or are considering refinancing.
Quick Update
The Bank of Canada kept its policy rate unchanged at 2.25% on September 2, 2026.
In explaining its decision, the Bank said inflation and economic growth had developed broadly in line with its previous forecast. However, it also said that upside risks to inflation had increased, while new tariffs had made the outlook for economic growth more uncertain.
The Bank highlighted persistent energy prices as one of the risks. CPI inflation had been hovering around 3% in recent months, largely because of higher gasoline prices, although inflation excluding gasoline was 2.2% in July and measures of core inflation remained close to 2%.
The next scheduled Bank of Canada interest-rate announcement is October 28, 2026. The Bank will also release its next Monetary Policy Report at that time.
That does not mean a rate increase is guaranteed.
The Bank has said it will continue assessing economic growth and the inflation outlook and is prepared to adjust monetary policy as needed.
Why Are Rate Hike Expectations Rising?
A major issue is inflation.
The Bank of Canada targets inflation at 2% over time. When inflationary pressures become more persistent, higher interest rates are one tool the Bank can use to reduce demand and help bring inflation under control.
In September, the Bank identified several areas of uncertainty.
High energy prices have been contributing to inflation, while ongoing geopolitical developments and new tariffs could increase costs for Canadian businesses and consumers.
The Bank noted that there had been limited evidence so far of higher energy prices spreading broadly through other parts of the economy. However, it also warned that the longer elevated energy prices persist, the greater the risk that those pressures spread to other goods and services.
That is why upcoming inflation, employment, consumer spending, economic growth, and business data will be important.
For homeowners, the key distinction is:
Markets can change their expectations before the Bank of Canada actually changes its policy rate.
Does This Mean the Bank of Canada Will Raise Rates?
Not necessarily.
Market expectations can change quickly as new economic information becomes available.
The Bank of Canada has not announced that it will raise rates at its October meeting.
Its September decision instead emphasized two competing risks.
Inflation risks have increased, but economic growth has also become more uncertain.
That creates a more complicated environment for monetary policy.
Rather than making a mortgage decision based on a prediction about the next Bank of Canada announcement, homeowners can focus on what their finances would look like under several possible rate scenarios.
What Could Higher Rates Mean for Variable-Rate Mortgage Borrowers?
Variable mortgage rates are generally more directly connected to changes in lenders’ prime rates, which tend to respond to changes in the Bank of Canada’s policy rate.
If the Bank eventually raises its policy rate, borrowers with variable-rate mortgages could therefore see their borrowing costs increase, depending on their mortgage structure.
The effect can differ between mortgage products.
Some variable-rate mortgages have payments that change as rates change. Other structures may keep the payment fixed for a period while changing how much of the payment goes toward principal and interest.
Homeowners with variable-rate mortgages should understand:
- Their current mortgage rate
- Whether their payment changes when rates change
- Their remaining amortization
- Their prepayment privileges
- Their renewal date
- What their household budget could support if borrowing costs increase
The objective is not to predict exactly where rates are going.
It is to understand how much flexibility exists if conditions change.
Could Fixed Mortgage Rates Change Even If the Bank of Canada Holds?
Yes.
One common misconception is that all Canadian mortgage rates move directly with the Bank of Canada’s policy rate.
Fixed mortgage rates work differently.
They are influenced by several factors, including Government of Canada bond yields, lender funding costs, competition, mortgage term, borrower circumstances, and lender pricing.
That means fixed mortgage rates can move before a Bank of Canada announcement or even during a period when the policy rate remains unchanged.
This distinction matters for homeowners approaching renewal.
Waiting for a Bank of Canada announcement does not necessarily mean the fixed mortgage rates available at renewal will remain where they are today.
What Does This Mean If Your Mortgage Is Renewing Soon?
For homeowners approaching renewal, changing rate expectations are another reason to review the mortgage before the maturity date rather than waiting until the last minute.
The Bank of Canada’s 2026 Financial Stability Report shows why renewal planning remains important.
The Bank estimates that the final group of five-year fixed-payment mortgages taken out during the pandemic and renewing over the following 12 months represents approximately 12% of outstanding Canadian mortgages.
On average, borrowers in that group were expected to experience payment increases of approximately 15%.
That does not mean every renewing homeowner will experience a 15% increase. The actual change depends on the mortgage balance, existing rate, new rate, amortization, payment structure, and other factors.
If your mortgage is approaching renewal, useful questions include:
- What is my current mortgage balance?
- How much amortization remains?
- What payment would different rates produce?
- Do I want to stay with my current lender or compare alternatives?
- Would changing the amortization affect the payment and total borrowing cost?
- Do I have other debts affecting monthly cash flow?
- Am I planning to sell, refinance, or access home equity?
Renewal planning should involve more than trying to guess the next Bank of Canada decision.
Could Higher Rates Affect Mortgage Qualification?
Potentially.
Interest rates can affect not only the payment on a mortgage but also how much financing a borrower may qualify for.
For many uninsured mortgages at federally regulated lenders, OSFI’s Minimum Qualifying Rate applies.
The current MQR is the greater of:
The mortgage contract rate plus 2 percentage points, or 5.25%.
As mortgage contract rates change, the qualifying rate used for some mortgage applications can therefore change as well.
There is an important exception for certain uninsured straight switches at renewal. OSFI does not expect federally regulated lenders to apply the MQR when an eligible uninsured mortgage moves from one federally regulated lender to another without increasing the loan amount or amortization period.
Refinancing, increasing the mortgage balance, or changing the amortization can be treated differently.
This is why homeowners should not assume that having sufficient home equity automatically means a particular mortgage structure will be available.
What About Homeowners Considering Refinancing?
Changing rates can also matter if you are considering refinancing.
A refinance may be used for different purposes, including restructuring a mortgage, accessing home equity, or consolidating higher-interest debt.
But the interest rate is only one part of the calculation.
Homeowners should also consider:
Property value: A lender may use an accepted property valuation when determining available mortgage financing.
Home equity: Existing mortgage balances, HELOCs, and other secured debts affect how much equity remains.
Qualification: Income, employment, credit, debts, property details, and lender requirements can affect approval.
Transaction costs: Refinancing may involve appraisal, legal, discharge, prepayment, or other costs depending on the transaction.
Total borrowing cost: A lower monthly payment does not necessarily mean the debt will cost less overall, particularly if repayment is extended.
The Bank of Canada’s Financial Stability Report also notes that falling property values can make refinancing more difficult for borrowers who have limited equity. The Bank reported that home-price declines have been particularly pronounced in Ontario and British Columbia.
What Should Ontario Homeowners Do Now?
There is no need to make a mortgage decision simply because markets are discussing the possibility of future rate increases.
A more useful approach is to understand your current position.
Start with five numbers:
1. Current mortgage balance
Know how much principal remains outstanding.
2. Current interest rate
Understand the rate you are paying and when your existing term ends.
3. Remaining amortization
Know how many years remain on your repayment schedule.
4. Estimated payment at different rates
Compare how your required payment could change under different realistic scenarios.
5. Other monthly debt payments
Credit cards, vehicle loans, personal loans, lines of credit, and other obligations can affect both household cash flow and mortgage qualification.
These numbers provide a clearer picture than trying to predict whether the Bank of Canada will move rates at its next meeting.
How Mortgage Brain Can Help
Mortgage Brain can help Ontario homeowners review their mortgage before making decisions based on changing interest-rate expectations.
A mortgage review may consider:
- Current mortgage balance
- Existing interest rate
- Renewal date
- Remaining amortization
- Fixed and variable mortgage options
- Household income and employment
- Consumer debt
- Property value and home equity
- Refinancing considerations
- Qualification requirements
- Payment affordability
- Longer-term property and financial plans
You can also use the Mortgage Brain mortgage calculator to compare estimated mortgage payments under different scenarios.
Calculator results are estimates only. Actual rates, payments, qualification, mortgage terms, and costs depend on the borrower, property, lender, and transaction.
Frequently Asked Questions
Did the Bank of Canada raise interest rates in September 2026?
No. The Bank of Canada held its policy interest rate at 2.25% on September 2, 2026.
When is the next Bank of Canada interest-rate decision?
The next scheduled decision is October 28, 2026. The Bank’s next Monetary Policy Report is scheduled for release at the same time.
Is a Bank of Canada rate hike guaranteed?
No. The Bank has not announced an October rate increase. It has said that upside risks to inflation have increased while growth prospects have become more uncertain and that it will continue assessing economic conditions.
Will fixed mortgage rates increase if the Bank of Canada raises rates?
Not necessarily by the same amount or at the same time. Fixed mortgage rates are influenced by bond yields, funding costs, lender pricing, competition, and other factors. They can move independently of an individual Bank of Canada announcement.
Would a Bank of Canada rate hike affect variable mortgage rates?
Potentially. Variable mortgage pricing is generally more directly connected to lenders’ prime rates, which tend to respond to Bank of Canada policy-rate changes. The effect on an individual borrower depends on the mortgage product and payment structure.
Should I refinance because rates might increase?
A possible future rate increase by itself does not determine whether refinancing is suitable. Property value, home equity, existing mortgage terms, penalties and costs, income, debts, qualification, borrowing purpose, and longer-term plans should also be considered.
Final Thoughts
The mortgage-rate conversation in Canada has changed.
The Bank of Canada has kept its policy rate at 2.25%, but inflation risks have increased and financial markets are paying closer attention to the possibility of future tightening.
For Ontario homeowners, that does not mean trying to predict exactly what the Bank will do next.
It means understanding how your mortgage would respond if borrowing conditions changed.
If your mortgage is approaching renewal, you have a variable rate, or you are considering refinancing, reviewing your balance, payment, amortization, debts, equity, and qualification position can provide a clearer picture of your options.
The next Bank of Canada rate decision is scheduled for October 28, 2026.
Contact Mortgage Brain to review your mortgage and upcoming renewal options.
Sources Referenced
- Bank of Canada, Bank of Canada Maintains the Policy Rate at 2¼%, September 2, 2026.
- Bank of Canada, Summary of Governing Council Deliberations: September 2, 2026.
- Bank of Canada, Financial Stability Report 2026: Households.
- Office of the Superintendent of Financial Institutions, Minimum Qualifying Rate for Uninsured Mortgages.
- Mortgage Brain mortgage and calculator resources.
Disclaimer
Mortgage Brain AI is a sub-brand of Matrix Mortgage Global, FSRA Licence #11108.
This article is for general educational purposes only and does not constitute financial, legal, tax, investment, credit-counselling, insolvency, or personalized mortgage advice.
Interest-rate expectations and financial-market pricing can change quickly and should not be interpreted as a prediction or guarantee of future Bank of Canada decisions, mortgage rates, or borrowing costs.
Mortgage renewals, refinancing, lender switches, debt consolidation, HELOCs, and other mortgage or home-equity solutions are subject to lender approval, income and employment verification, credit review, property valuation, applicable loan-to-value limits, mortgage terms, documentation, qualification requirements, applicable regulations, and individual lender policies.
A lower mortgage payment or interest rate does not necessarily result in lower total borrowing costs. Refinancing or extending repayment may increase total interest costs depending on the circumstances.
Mortgage rates, qualification requirements, property values, government regulations, lender policies, products, and fees may change.
Mortgage Brain does not guarantee mortgage approval, refinancing eligibility, a particular interest rate, lower payments, interest savings, or any specific financial outcome.
