If mortgage rates go up just one percent, a buyer with a $2,000 monthly budget could afford almost $40,000 less house. And right now, there’s real talk about rates going up.

The Bank of Canada hasn’t raised its rate. It’s been holding at 2.25% for almost a year. But fixed mortgage rates have already started climbing this fall, and a rate increase is back on the table. Whether you’re a first-time buyer, a downsizer, or thinking about selling in Windsor-Essex, Chatham-Kent, or anywhere in Ontario, this affects you.

I want to be upfront. This isn’t a post telling you to rush out and buy, or rush out and sell. Nobody knows for sure what rates will do. My goal is to show you what it could look like, so you can plan ahead instead of being caught off guard.

Where Interest Rates Stand Right Now

On September 2, 2026, the Bank of Canada held its policy rate at 2.25%. But it also noted that long-term bond yields have risen, both here and around the world. That’s what drives fixed mortgage rates.

A few things are pushing in that direction:

• Inflation hit 3% in July.
• Oil prices have stayed high.
• New tariffs are taking effect on both sides of the border.

Some economists think the Bank’s next move is up. Others expect it to hold for the rest of the year. The two remaining 2026 announcement dates are:

• Wednesday, October 28, 2026
• Wednesday, December 9, 2026

5 Things Nobody Tells You About Rising Interest Rates

1. Fixed Rates and the Bank of Canada Rate Aren’t the Same Thing

When the Bank of Canada raises its rate, variable mortgages and lines of credit go up right away. Fixed mortgage rates follow the bond market instead, and they often move before the Bank does.

That’s why fixed rates crept up this fall even though the Bank hasn’t touched its rate. In mid-September, the lowest insured five-year fixed rate in Canada was about 4.09%. By late September, it was about 4.24%.

2. Most Buyers Shop by Payment, Not Price

Most people know what monthly payment they’re comfortable with. So the real question is: what does that payment buy you as rates change?

Here’s an example. You’re buying a $400,000 home with 10% down. Add the mortgage default insurance, and your mortgage is about $371,160, amortized over 25 years. At 4.24%, your payment is about $2,001 a month.

Estimates assume 10% down, mortgage default insurance added to the loan, and a 25-year amortization. Your numbers will vary by lender, rate, and down payment.

Same payment, almost $40,000 less house. Or, if you keep the same house, a full one-point increase costs about $209 more every month, which adds up to roughly $12,500 over a five-year term. At higher price points, those numbers get bigger.

3. The Stress Test Gets Harder, Especially for First-Time Buyers

To get approved, lenders test you at your contract rate plus 2%, or 5.25%, whichever is higher. So when rates rise, the bar to qualify rises with them.

First-time buyers feel this the most. If you’re putting every dollar toward your down payment and your budget is already stretched, even a small increase can change what you’re approved for. A price range that worked a few months ago may not work anymore.

4. You Can Protect Yourself with a Free Rate Hold

When you get a full mortgage pre-approval, most lenders will hold your rate while you shop. Most big banks hold for 120 days, a few go up to 130, and some lenders hold for 90. With many lenders, if rates drop during your hold, you can ask for the lower rate.

A few things to know:

• It has to be a full pre-approval with a credit check. A quick online pre-qualification won’t hold anything.
• Confirm the hold covers the mortgage term you actually want.
• Ask what happens if the hold expires before you close. If it does, you’ll get whatever the rate is that day.

5. Rising Rates Affect Sellers Too

Even if you’re not borrowing a dime, your buyer probably is. If every buyer can afford a little less, fewer people qualify at your price.

That doesn’t mean prices are going to drop. Nobody can promise that. But less buying power can mean more pressure on price and more time on the market, whether you’re selling in Leamington, Kingsville, Wheatley, or anywhere across southwestern Ontario.

If you’re downsizing, you might be buying your next home with cash or a lot of equity, so rates barely touch your purchase. But the buyer for the home you’re selling is likely financing, so their rate still matters to you.

If you were already planning to sell in the next six months, it’s worth thinking carefully about timing.

The Bottom Line

Rates might hold. They might go up. Nobody knows for sure. But now you know what each move could mean for you, whether you’re buying your first home, downsizing, or selling. No surprises.

Frequently Asked Questions

Will interest rates go up in Canada in 2026?

It’s possible, but not certain. The Bank of Canada held its rate at 2.25% in September and said rising inflation risks are on its radar. Its remaining 2026 decisions are on October 28 and December 9.

How much does a quarter-point rate increase cost a home buyer?

On a $400,000 home with 10% down, a quarter-point increase adds about $51 a month to your payment. Put another way, it reduces what you can afford by about $10,000 at the same monthly payment.

How long can I hold a mortgage rate in Canada?

Most lenders offer rate holds of 90 to 120 days, and a few go up to 130 days. You need a full pre-approval with a credit check, and the hold is free.

Cheers,
Linda Hakr, REALTOR®