By Daniel Johanis, Principal Broker, Pekoe Mortgages
On October 19, I was in Calgary for the National Mortgage Conference, in a room with nearly every lender in Canada. These are the people who set the rates you get offered at renewal, so it’s one of the most useful days of my year.
The talk I keep coming back to was from Stéfane Marion, Chief Economist and Strategist at National Bank of Canada. He spoke just hours after the latest inflation numbers came out, with the Bank of Canada’s next rate decision only nine days away.
Most of his presentation was about the big forces pushing on borrowing costs: wars disrupting energy supplies, the U.S. rebuilding its manufacturing base, and the enormous wave of spending on AI and the power grids it needs. Then, in his closing remarks, he gave the room the answer it came for. His view is that most of the increase in interest rates we’ve seen is likely already behind us.
That isn’t a promise of cheap money. But for anyone renewing, buying, or sitting on a variable rate right now, it changes how you should think about the next few months.
Will the Bank of Canada raise rates on October 28?
It’s a genuine toss-up. The Bank has held its policy rate at 2.25% since October 2025. Inflation rose to 3.1% in September, up from 3.0% in August, mostly because gasoline prices were up 27.8% from a year earlier. Take gas out and inflation was 2.2%, and the Bank’s preferred core measures sat close to 2%.
Forecasters are split. Scotiabank has moved its call to a hike in October. RBC expects the Bank to hold for now and start raising gradually in early 2027. That disagreement is exactly why I’m not making a call either way, and why I’d plan for both.
Why are fixed mortgage rates up when the Bank of Canada hasn’t moved?
Because fixed and variable rates come from different places, and this is the part most people miss.
Variable rates follow the Bank of Canada. When the Bank changes its policy rate, lenders’ prime rates move with it, and so do variable mortgage rates.
Fixed rates follow the bond market. Lenders price 5-year fixed mortgages off Government of Canada bond yields, plus their own margin. Bond yields react to global forces, not just Canadian ones. If you are weighing one against the other, fixed versus variable sets out the trade-off in full.
Marion pointed out that 5-year fixed rates are already at their highest level since 2024. Energy shocks, tariffs and huge global investment have pushed bond yields up well before the Bank of Canada did anything. He also suggested lenders’ margins have settled back to more normal levels.
Put those together and you get his main point. A lot of the bad news may already be built into fixed rates. He isn’t forecasting a return to the ultra-low rates of a few years ago. His view is that rates are closer to a plateau than a new climb, and that steadier rates could help the housing market recover over time.
Will home prices and building costs come down?
Don’t count on new home prices falling much. Marion argued that big infrastructure projects, power grid expansion and data centres compete for the same trades and materials as home builders. That keeps construction costs high, even if borrowing costs level off.
On the demand side, Canada’s population growth has slowed sharply, which has taken pressure off housing demand in the short term. Over the longer run, he expects a growing number of people aged 25 to 54, the main home-buying age group, to support a recovery in sales. How that plays out will look very different in Kitchener-Waterloo, Brantford, Calgary or Canmore, so local advice matters.
What to do before the October 28 rate decision
If your mortgage renews in the next 6 to 12 months
Get a rate hold now. Many lenders will hold a rate for up to 180 days. If rates rise, you’re protected. If they fall, you take the lower rate. It costs nothing, and it takes the guesswork out of the next announcement. Don’t just sign your bank’s renewal letter without comparing; that letter is rarely its best offer. Our guide to what a pre-approval actually holds explains what a hold does and does not cover, and our renewal service prices switching against staying put.
If you have a variable rate
A hike would raise your payment, or change how much of it goes to principal. That’s not a reason to panic and lock in, but it is a reason to know your numbers. Most variable mortgages let you convert to a fixed rate without a penalty. I can show you what a hike would cost you next to today’s fixed options so you can decide calmly.
If you’re buying in the next year
Get pre-approved with a rate hold before the announcement, so your rate is covered whatever happens. With population growth slowing, many markets have less competition than buyers faced a few years ago, which can mean more room to negotiate.
Frequently asked questions
Will mortgage rates go down in 2026?
Nobody can promise that. National Bank’s chief economist believes most of the recent rise in rates is likely behind us, which points to stabilization rather than a steady climb. A big drop back to the low rates of a few years ago isn’t the forecast he described.
Is the Bank of Canada raising rates in October 2026?
The decision is on October 28, 2026, and forecasters are split. Inflation rose to 3.1% in September, mainly because of gas prices, while core inflation stayed close to the Bank’s 2% target.
Why did fixed mortgage rates go up when the Bank of Canada held rates?
Fixed rates are priced off Government of Canada bond yields, not the Bank of Canada’s policy rate. Global factors like energy prices, tariffs and large-scale investment pushed bond yields higher, and fixed rates followed.
Should I lock in my mortgage renewal now?
If you renew within the next 6 months or so, a rate hold protects you from increases while still letting you take a lower rate if one appears. If your renewal is further out, it’s still worth reviewing your options early.
Should I switch from variable to fixed?
It depends on your budget, your timeline and how much payment change you can handle. Most variable mortgages can convert to fixed without a penalty, so it’s worth comparing both side by side with a broker before deciding.
The bottom line
I came home from Calgary feeling steadier than I expected. Nobody in that room was calling for a crash or a return to 2% mortgages. The message was simpler: the big run-up in rates is likely mostly done, and people who plan ahead will come out of the next year in the best shape.
If you’d like to know where you stand, I’m happy to walk you through it. Pekoe Mortgages works with clients across Ontario and Alberta, from our offices in Kitchener-Waterloo and Canmore.
If you want to go into that renewal conversation properly prepared, our paid course, the Renewal Negotiation Playbook, walks through the whole negotiation step by step.
Comments attributed to Stéfane Marion are Daniel Johanis’s summary of his presentation at the National Mortgage Conference in Calgary on October 19, 2026. They reflect his views, not a forecast or guarantee from Pekoe Mortgages. This article is general information, not personal financial advice. Pekoe Financial Inc. o/a Pekoe Mortgages, FSRA Brokerage No. 13321. Daniel Johanis, Mortgage Agent Licence M16000320. Licensed in Alberta with RECA.