At this important stage in your home purchase, renewal, or refinancing decision, you may be wondering why fixed mortgage rates are climbing when the Bank of Canada has not raised its policy rate.
It is a reasonable question. As of September 2026, the Bank of Canada’s overnight rate remains at 2.25%, and the Bank has held it for seven consecutive announcements. The next scheduled rate announcement and Monetary Policy Report are set for October 28, 2026. The bank prime rate is currently 4.45%. (Bank of Canada, September 2, 2026)
However, fixed mortgage rates have moved higher this fall. That is because fixed rates generally follow bond-market pricing, not the overnight rate directly.
So, should you lock in a fixed rate, choose a variable mortgage, or wait?
The right answer depends on your budget, timeline, and comfort with changing payments. Here is how to think through the decision.
Why fixed rates can rise while the Bank of Canada holds
The Bank of Canada’s overnight rate has the strongest direct influence on variable-rate mortgages. When the Bank changes its policy rate, lenders generally adjust their prime rates, which can affect variable mortgage payments.
Fixed mortgage rates work differently.
Lenders usually price a five-year fixed mortgage using the five-year Government of Canada bond yield as an important market reference. The five-year bond yield reflects investor expectations about inflation, economic growth, government borrowing, and future interest rates.
As of September 24, 2026, the five-year Government of Canada benchmark bond yield was 3.69%, according to the Bank of Canada. That was approximately 25 basis points higher than earlier in September and about 56 basis points higher than in February. (Bank of Canada bond yields, data dated September 24, 2026)
That means fixed mortgage rates can rise even when the Bank of Canada is on hold.
During the week of September 21, 2026, the best available five-year fixed mortgage rates were hovering around 4.24%, while selected major-bank posted or special offers were higher: approximately 4.59% at CIBC, 4.69% at National Bank, 4.74% at BMO, 4.84% at TD, 4.89% at RBC, and 4.94% at Scotiabank. These figures came from My Mortgage Approved’s internal rate digest for that week and the lenders’ published rate pages. Rates vary by borrower profile, mortgage type, down payment, property, and lender. (CIBC rates, National Bank rates, BMO rates, TD rates, RBC rates, Scotiabank rates; snapshot dated week of September 21, 2026)
Lenders have also been raising fixed mortgage pricing and withdrawing some discretionary discounts. In practical terms, that has added approximately 20 to 40 basis points, or more in some cases, to borrower pricing during this fall’s repricing cycle, according to the same September 2026 internal rate digest.
What a rate hold actually does
A rate hold allows you to reserve a fixed mortgage rate for a specific period while you complete your purchase, renewal, or lender switch.
Rate holds commonly last 30 to 150 days, with approximately 90 to 120 days being typical, depending on the lender and mortgage type. (Nesto rate-hold guide, accessed September 2026)
A rate hold may help you in two ways:
- It can protect you if fixed rates rise before your mortgage closes.
- It may still allow you to take a lower rate if your lender offers one before closing.
A rate hold does not necessarily mean you must proceed. The specific conditions depend on the lender, your application, and the type of mortgage you are arranging. Variable rates generally cannot be locked in the same way because they move with the lender’s prime rate.
If you are buying a home, a rate hold can provide useful planning certainty while you finalize your financing. If your mortgage is coming up for renewal, it can give you time to compare your current lender’s offer with other options.
Fixed versus variable: start with your budget
During the week of September 21, 2026, five-year variable rates were starting around 3.40% to 3.95%, depending on the lender and product. Some broker-channel adjustable-rate mortgages were near prime minus 0.85%, which worked out to approximately 3.60% using the 4.45% prime rate in effect at that time. These figures are a dated market snapshot, not a quote or guarantee. (My Mortgage Approved internal rate digest, week of September 21, 2026; Bank of Canada key rates)
The initial payment on a variable mortgage may therefore be lower than the payment on a comparable fixed mortgage. However, your payment or interest cost may change if the lender’s prime rate changes.
A fixed mortgage may suit you better if:
- You need predictable payments for household budgeting.
- A higher payment would make your finances uncomfortable.
- You are managing childcare, renovation, education, or other major expenses.
- You would find changing rates stressful.
- You expect to remain in the property for much of the mortgage term.
A variable mortgage may suit you better if:
- You have room in your budget for payment changes.
- You understand that rates may rise before they fall.
- You value potentially lower initial pricing.
- You are comfortable reviewing your mortgage regularly.
- You may benefit from generally lower break costs.
The most useful question is not simply, “Which rate is lower today?”
Ask yourself: If rates rise, could you still comfortably afford the payment?
If the answer is yes, a variable mortgage may be manageable for you. If the answer is no, or you would lose sleep worrying about it, a fixed mortgage may provide valuable certainty, even if its starting rate is higher.
Do not overlook the break-cost difference
Your expected time in the mortgage matters. So does the cost of changing your mind.
Variable-rate mortgages are usually cheaper to break. In many cases, the penalty is approximately three months’ interest.
Fixed-rate mortgages commonly charge the greater of:
- Three months’ interest; or
- An interest rate differential, often called an IRD.
An IRD can be substantial when market rates fall below your fixed contract rate, particularly if you have several years remaining in the term. Your actual penalty depends on the lender’s calculation method, mortgage balance, remaining term, and contract.
For that reason, a fixed rate may not be the best choice if you expect to sell your home, refinance, or make a major change before the term ends. A variable mortgage may offer more flexibility, but it does not eliminate risk.
Before you choose, ask for the lender’s prepayment terms and consider your likely plans. The Financial Consumer Agency of Canada also recommends reviewing costs before breaking or switching a mortgage. (FCAC: Breaking your mortgage contract)
What to do if your renewal is within 120 days
If your mortgage maturity date is within approximately 120 days, it is generally time to begin comparing your options.
Many lenders allow you to lock in a renewal rate with your existing lender up to 120 days before maturity without a prepayment penalty. However, the exact window is lender-specific, so confirm the terms of your mortgage.
You can:
- Ask your current lender for its renewal offer and early-renewal rules.
- Request a detailed mortgage statement, including your balance, maturity date, payment, and prepayment privileges.
- Compare fixed and variable options, not only the headline rate.
- Check whether switching lenders involves appraisal, legal, registration, or discharge costs.
- Ask whether the new mortgage is portable and what happens if you sell.
- Review the payment at several possible rates using a mortgage calculator.
- Obtain a rate hold where appropriate, while continuing to compare your options.
You do not have to accept the first renewal offer you receive. FCAC recommends shopping around and negotiating with your current lender rather than allowing your mortgage to renew automatically without review. (FCAC: Renewing your mortgage)
Should you lock in, go variable, or wait?
Here is a practical way to frame your decision:
Lock in a fixed rate if payment certainty is your priority
If your budget is tight or rising payments would create difficulty, locking in may be sensible. You are paying for stability and protection from future increases. That may be worthwhile even if a variable rate currently appears lower.
Consider variable if you have a strong payment cushion
If you can comfortably handle higher payments and understand the risks, a variable mortgage may offer a lower starting rate and potentially more flexibility. You should still test your budget against higher rates before proceeding.
Wait only when you have a clear reason
Waiting may make sense if your purchase, renewal, or financing decision is still several months away and you are actively monitoring the market. However, waiting is not risk-free. Fixed rates could rise further, and a lower future rate is not guaranteed.
If you are within a rate-hold period, securing a hold may allow you to protect your position while you continue reviewing the numbers.
The right answer depends on your situation
Fixed rates have risen this fall because bond yields and lender pricing have moved higher, not because the Bank of Canada raised its overnight rate. That distinction explains the market, but it does not tell you which mortgage is right for you.
Your best option depends on your income, payment comfort, down payment or equity, time horizon, future plans, and risk tolerance. Affordability has been finding its footing, but higher borrowing costs could still affect what you can comfortably carry. (Mortgage Professionals Canada market commentary)
At My Mortgage Approved, we can compare fixed, variable, and adjustable options across hundreds of mortgage products from banks, credit unions, trust companies, and other financial institutions, not just one bank’s shelf.
We can help you review the payment, rate-hold terms, prepayment privileges, and potential break costs before you decide. There is no universal answer, but a clear comparison may help you move forward with greater confidence.
You can also download your personalized, branded My Mortgage Toolbox app for iOS and Android to access a payment calculator, rate tools, and mortgage planning resources: https://dlcapp.ca/app/ajit-pandit
Visit My Mortgage Approved to start a conversation about your purchase, renewal, refinance, debt consolidation, or home-equity options. Take comfort knowing that you do not have to make this decision alone.