Mortgage Blog

The Bank Could Hold All Year. Your Renewal Could Still Cost More.

November 13, 2026 | Posted by: Daryl Johnson

Here is a scenario worth understanding before it happens to anyone. The Bank of Canada holds its rate steady through all of 2027. No hikes, no cuts. And when your mortgage comes up for renewal, the new fixed rate is higher than the one you have now.

That is not a trick. It is how fixed rates are priced, and this week a major forecaster put it in writing.

Fixed rates do not follow the Bank. They follow the bond market.

A variable mortgage moves with the Bank of Canada, through your lender's prime rate. A fixed mortgage is priced off the Government of Canada bond yield of the same term, plus the lender's margin. The Bank does not set that yield. Investors do, and investors charge more when governments and companies are borrowing heavily.

Moody's Analytics, in an outlook reported this week through RPS Real Property Solutions, cut its 2027 home-price forecast for Canada and said mortgage rates are likely to follow bond yields higher, driven by financing demand from governments and from companies investing in artificial intelligence. Their words, in plain terms: the Bank could hold, and borrowing could still get more expensive. Moody's still expects modest home-price gains in 2027, with Ontario and British Columbia lagging the rest of the country. That is one forecaster's view, not a promise. But the mechanism underneath it is not a forecast at all. It is just how the pricing works.

Meanwhile, the Bank's side of the story got clearer this week, and it is not a dovish one.

On Tuesday the Bank published the summary of deliberations behind the October 28 hike, its first increase since July 2023. Council weighed holding at 2.25% against hiking to 2.50%, chose the hike, and agreed that further increases could be needed. The plan, in their framing, is one meeting at a time. The Bank's own projection has inflation at about 3.5% by the end of 2026, above 3% through much of 2027, and back to 2% around mid-2028.

The framework renewal the week before underlines why. The Bank's mandate was renewed for five years, to December 31, 2031, with the 2% target unchanged. There is no version of that mandate where the Bank shrugs at 3% inflation. Headline inflation has been near 3% since April, so the December 9 decision is a live question, and market pricing this week had it close to a coin flip.

The counterweight is jobs. October employment was little changed, down 4,700 nationally, with unemployment up to 6.7% and wage growth of 2.2%, below inflation. Ontario was flat for a third straight month, with unemployment at 7.3%. The Bank is hiking on inflation risk into a softening labour market, which is exactly why nobody honest can tell you December 9 is settled. The next jobs report lands December 4, five days before the decision.

What this means at your kitchen table

If you are on a variable rate, the risk runs through the Bank: one more hike would add about $13 a month per $100,000 on an adjustable payment, if lenders pass it through in full. Prime at the major banks sits at 4.70% today. Treat that as an example only, because each lender sets its own prime.

If you renew in 2027 on a fixed rate, your risk runs through the bond market instead, and it does not care whether the Bank holds or hikes. The practical move is the same either way: run your renewal number at today's fixed rate, then at half a point higher, and see which one your cash flow can carry. Decide on that math now, while it is still hypothetical, instead of in renewal week, when it is a deadline.

And if you are choosing between fixed and variable today, you are really choosing which of those two risks you would rather own.

The budget follow-through, one week on

Last week's federal budget proposals are still proposals, not law, and nothing about them has changed since: the insurable price limit proposed to rise from $1 million to $1.5 million with 30-year amortizations for first-time buyers and new builds, mortgage insurance for small multi-unit homes starting February 1, 2027, and the foreign-buyer ban on existing homes proposed to run to January 1, 2029 with new builds exempt. The February date is the only one firm enough to plan around. If a three- or four-unit purchase is in your 2027 plans, that conversation is worth having now. Everything else: build the plan, wait for the rules.

Closer to home: buyers still hold the power in Simcoe

October numbers for the Simcoe-area market I follow show 632 sales, down about 14% from a year ago, an average price of $721,479, and 7.7 months of inventory. The deepest choice sits in Collingwood and The Blue Mountains, at 11.9 months of inventory, with homes around Georgian Bay selling at 95% to 96.5% of asking.

The GTA, our feeder market, tells the same story: October sales down 7.9%, average price $1,024,108, and listings falling faster than sales, which is why inventory is not ballooning even in a buyer's market.

Grey Bruce's own October board numbers are not out until November 17. I will carry them here when they land, and they get the full treatment in next week's edition.

What to do with all of this

If your mortgage renews between December and February, my renewal intake is open now. The December 9 decision lands in the middle of that window. A rate hold plus a two-line plan, one line for a hold and one for a hike, is November work, not renewal-week work.

If you are buying in the spring, preparation is the whole edge right now: pre-qualified at a number that survives one more hike, closing costs counted, and a payment you have already stress-tested at half a point higher. Running your numbers takes about five minutes in my app and does not affect your credit. It is a pre-qualification, not a pre-approval.

The numbers, as of Thursday, November 12

• The Bank of Canada's main rate: 2.50%.
• Prime at the major banks: 4.70% (each lender sets its own prime).
• The 5-year Government of Canada bond yield, the benchmark most fixed mortgage pricing follows, was about 3.35% in the latest Bank of Canada reading, after ranging from roughly 3.36% to 3.49% over the prior week.
• Next Bank of Canada decision: Wednesday, December 9.
• October jobs: employment down 4,700, unemployment 6.7%. Next jobs report: December 4.
• Grey Bruce October board stats: November 17.

The Bank holding still does not freeze your renewal. Two different rates, two different engines, and a sound plan should account for both.

Daryl Johnson, Mortgage Agent Level 2 | Mortgage Architects Brokerage #12728 | Licence #M22004539

Georgian Bay: Home & Mortgage covers Grey Bruce and Simcoe, including the Bruce Peninsula. Home, Life & Long Weekends.

Back to Main Blog Page