Oct 21, 2026
Canadian homeowners could face higher borrowing costs as early as the first half of 2027, according to a preliminary assessment from Canada Mortgage and Housing Corporation (CMHC) chief economist Mathieu Laberge.
Speaking at Mortgage Professionals Canada’s 2026 National Mortgage Conference in Calgary, Laberge suggested the Bank of Canada (BoC) could begin raising its policy rate in late Q1 or early Q2 of 2027. This could bring the first increase forward from CMHC’s previous mid-2027 outlook.
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The comments are an early indication, not a finalized forecast. However, they give homeowners with variable-rate mortgages, home equity lines of credit (HELOCs) or upcoming renewals a reason to review their finances before borrowing costs potentially rise again.
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“We may bring that [previous forecast] forward a little. So maybe end of Q1, early Q2, 2027, but I don’t see anything this year,” Laberge told attendees, according to Canadian Mortgage Trends.
Why interest rates could rise in 2027
The BoC’s policy rate stood at 2.25% following its September decision, with its next announcement scheduled for October 28.
Inflation remains a key consideration. Statistics Canada’s latest Consumer Price Index report, released October 19, showed annual inflation rising to 3.1% in September from 3.0% in August, driven primarily by gasoline prices, which rose 27.8% year over year. However, inflation excluding gasoline eased to 2.2%.
Laberge also pointed to higher oil prices and global supply-chain disruptions as inflationary pressures, while labour-market weakness could make the BoC more cautious. The central bank’s October 28 announcement should offer a clearer picture of how these competing pressures are evolving.
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What higher interest rates would mean for mortgage holders
Clinton Wilkins, vice chair of Mortgage Professionals Canada and principal broker at the Clinton Wilkins Mortgage Team, told Money.ca that the impact would depend on borrowers’ mortgage products.
Borrowers with adjustable-payment variable-rate mortgages generally see payments rise as rates increase. Those with fixed-payment variable mortgages may instead see more of each payment go toward interest, extending their amortization. HELOC borrowers could also face higher interest costs.
Fixed-rate mortgage holders won’t see their contract rate change during the term, but those renewing in 2027 could encounter different rates. Fixed mortgage rates are influenced by bond yields and market expectations, so they can move independently of the BoC’s policy rate.
Higher borrowing costs could also reduce prospective buyers’ purchasing power, so they should budget for the possibility of less favourable mortgage rates.
How homeowners can prepare for possible rate hikes
Homeowners can review their finances and mortgage terms now to prepare for potential rate increases.
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Wilkins recommended speaking with an unbiased mortgage professional, particularly if household expenses are already putting pressure on affordability. Refinancing or extending a mortgage amortization to 25 or 30 years may reduce monthly payments, he said.
However, a longer amortization generally means paying more interest over time. Refinancing can involve fees or prepayment penalties, while consolidating unsecured debt into a mortgage puts the home at risk if payments become unmanageable.
“Borrowers should focus on needs versus wants. Keep the unsecured debt at a minimum,” Wilkins told Money.ca.
He also noted that borrowers who extend their amortization to manage current costs can look to shorten it later by increasing regular payments, making lump-sum contributions or switching to a shorter amortization at renewal once borrowing costs and inflation ease.
Homeowners should check their renewal dates, understand how their mortgage responds to rate changes and compare refinancing offers carefully. Building an emergency fund can also help households absorb higher payments or unexpected expenses without relying on more borrowing.
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Steven Brennan is a freelance finance writer based in Vancouver, BC. He holds a BA and an MA from Maynooth University, Ireland. His work regularly appears at Canadian Mortgage Trends, Lowest Rates, Loans Canada and other Canadian and U.S. brands.
