Canada’s mortgage market is adjusting to higher interest rates amid persistent inflation and a weakening labour market. Employment declined by 42,000 in August and 68,000 in September, a combined loss of 110,000 jobs. The unemployment rate rose to 6.5% in September, while annual inflation increased to 3.1%, up from 3.0% in August.
On October 28, the Bank of Canada raised its overnight policy rate by 0.25 percentage points to 2.50%, its first increase since July 2023. Consequently, major banks increased their prime lending rates to 4.70%. The Bank also revised its 2027 inflation forecast upward from 2.0% to 3.1%, while upgrading its economic growth forecast from 1.8% to 2.0%. Higher energy prices and import costs remain key concerns.
Against this backdrop, borrowers face important choices between fixed and adjustable mortgage rates. Our featured five-year insured adjustable rate is currently 3.70% (Prime minus 1.00%), compared with a five-year insured fixed rate of 4.99%. This represents an initial interest-rate difference of 1.29 percentage points. However, further Bank of Canada rate increases could raise adjustable mortgage payments. Borrowers should carefully consider their financial circumstances, cash flow and tolerance for interest-rate fluctuations.
Mortgage Market at a Glance
- Bank of Canada overnight rate: 2.50%, increased by 0.25 percentage points on October 28, 2026, the first hike since July 2023.
- Bank prime rate: 4.70%, up from 4.45%, effective October 29, 2026.
- Next Bank of Canada announcement: Wednesday, December 9, 2026.
- Canadian inflation: 3.1% in September 2026, up from 3.0% in August. Excluding gasoline, inflation eased to 2.2% from 2.4%.
- Canadian unemployment rate: 6.5% in September, up from 6.4% in August. Employment declined by 110,000 over August and September combined.
- 2027 inflation outlook: 3.1%, revised upward from the Bank of Canada’s July forecast of 2.0%.
- 2027 economic growth outlook: 2.0%, upgraded from 1.8%, supported partly by business investment and government spending.
- Interest rate outlook: Rising bond yields continue to put upward pressure on fixed mortgage rates. Meanwhile, persistent inflation and higher energy costs leave open the possibility of further Bank of Canada rate increases.
Featured Mortgage Rates
Adjustable Rate Mortgage (A.R.M.): Your regular mortgage payment adjusts automatically when the Prime rate changes. When Prime decreases, your payment falls, improving monthly cash flow. However, when Prime increases, your payment rises. These adjustments generally help keep your mortgage on its original amortization schedule.
Variable Rate Mortgage (V.R.M.): Your regular mortgage payment generally remains unchanged when the Prime rate moves. Instead, the proportion allocated to principal and interest changes. If interest rates rise significantly, borrowers may reach a trigger rate, potentially requiring payment adjustments or other action.
Rates shown are generally for qualified borrowers purchasing or refinancing owner-occupied properties, subject to applicable mortgage insurance and lender eligibility requirements. Higher rates may apply to conventional mortgages, rental properties, and borrowers with weaker credit profiles. B-lender and private mortgage rates shown are starting rates.
All mortgage rates are subject to change without notice. Terms, conditions, lender fees, mortgage insurance requirements, and approval criteria may apply.
Not Sure Which Mortgage Option Is Right for You?
The lowest rate is not always the best mortgage. Choosing between fixed, adjustable, and variable rates depends on your financial goals, cash flow, risk tolerance, and future plans. Book a phone or Zoom appointment with me to explore the mortgage options that best suit your needs.
| Mortgage Option | Current rate (Owner-Occupied) |
|---|---|
| 5-Year High-Ratio A.R.M. (90-day hold) | Prime (4.45%) − 1.00% = 3.70% |
| 3-Year High-Ratio A.R.M. (120-day hold) | Prime − 0.90% = 3.80% |
| 5-Year High-Ratio Fixed (120-day hold) | 4.99% |
| 4-Year High-Ratio Fixed (120-day hold) | 4.94% |
| 3-Year High-Ratio Fixed (120-day hold) | 4.79% |
| 2-Year High-Ratio Fixed (120-day hold) | 4.59% |
| 1-Year High-Ratio Fixed (120-day hold) | 4.79% |
| 6-Month High-Ratio Fixed (90-day hold) | 3.99% |
| B-Lender 1-Year Fixed (90-day hold) | 4.99% (Credit score 680+) by a bank |
| B-Lender 2-Year Fixed (90-day hold) | 5.39% (Credit score 680+) |
| B-Lender 3-Year Fixed (90-day hold) | 5.49% (Credit score 680+) |
| Second Mortgage – EquityLine Visa (ELV) | From 6.99% (LTV up to 60%, credit score 680+) |
| Private First Mortgage (65% Loan-To-Value) | From 5.99% (credit score 660+, 1% lender fee) |
| Private Second Mortgage (65% Loan-To-Value) | From 8.99% (credit score 660+, 1% lender fee) |
Last updated: November 4, 2026
Text Maurice: 416-618-9312
Web: https://MortgageMaurice.ca/contact (to set up an appointment)
email: maurice@sherwoodmortgagegroup.com
Maurice Kwok ・ 郭澤文
Mortgage Broker, CPA, MBA ・ 粵語 ・ 國語
FSRA-licensed Mortgage Broker (Licence #M13000496)
Sherwood Mortgage Group (FSRA Brokerage Lic.#12176)
Your trusted mortgage guide since 1995.