Oct 6, 2026
Three weeks after the U.S. Federal Reserve raised interest rates, Canadian fixed mortgage rates have moved higher too. But borrowers shouldn’t assume the Fed’s latest decision means Canadian fixed rates are headed sharply higher from here.
The Fed voted unanimously on Sept. 16 to raise its federal funds rate from 3.75% to 4%, despite President Donald Trump’s calls for rates of 1% or lower.
Advertisement
The Fed decision wasn’t unexpected — with Canadian rates moving around the same time. On Sept. 14, the five-year Government of Canada bond yield increased to 3.711% (up from 3.448% on Sept. 8) — a 52-week high. This prompted Canada’s Big Six Banks (and other major lenders) to increase selected fixed mortgage rates, generally by 10 to 20 basis points — with the lowest five-year fixed mortgage rate increasing to 4.24%, up from 4.09%, over September; rates below 4% disappeared from the market.
Thanks for subscribing!
The best of Money.ca delivered weekly.
By signing up, you accept Money.ca Terms of Use, Subscription Agreement, and Privacy Policy.
But there is good news. According to Tracy Valko, founder and principal broker at Valko Financial, the Fed’s most recent decision is unlikely to drive another significant move in Canadian fixed rates.
“Much of the Fed’s move was anticipated and already reflected in bond yields, so I wouldn’t expect this hike alone to trigger another significant move in Canadian fixed rates,” she told Money.ca.
Will Canadian fixed mortgage rates keep rising?
Fixed mortgage rates are influenced by bond yields rather than moving directly with a central bank’s overnight policy rate. That means the Fed can affect Canadian mortgage pricing without the Bank of Canada necessarily following its lead.
If U.S. yields remain elevated, that pressure can spill into Canadian bond yields and, in turn, fixed-rate pricing.
An Axios analysis of the Fed and financial markets noted that uncertainty around the central bank’s policy direction can contribute to volatility in bond markets as investors try to anticipate where rates are headed.
For Canadian borrowers, that means the Fed’s influence is less about the rate it sets directly and more about how investors respond to its decisions. A shift in expectations around inflation or the future path of U.S. rates can move bond yields, which can then affect the pricing of fixed mortgages in Canada.
But the latest Fed hike was already largely anticipated by markets, and Valko said it is too early to call this latest move the start of another sustained rise in Canadian fixed mortgage rates.
“I expect volatility more than a straight line higher,” she said. “The important shift is that borrowers can no longer assume waiting automatically means a better rate.”
Must Read
- A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change
- Here are 5 'must-haves' that Canadians constantly overpay for. How many of these are sabotaging your budget every single month?
- Here are the 5 biggest differences between rich and poor Canadians — which side do you fall on?
Join 20,000+ readers and get Money.ca’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
What should Canadian borrowers do?
For someone buying a home, renewing a mortgage or refinancing, that makes trying to time the market particularly difficult.
Advertisement
The Fed’s decision could contribute to further movement in bond yields, but what happens next will depend on more than one rate decision. Inflation, employment and economic growth will all influence how markets view the path for interest rates in the weeks ahead.
That leaves borrowers weighing the potential benefit of waiting for a lower rate against the risk that fixed rates move in the other direction.
For borrowers, Valko said the focus should be on building a mortgage that can withstand changes in the rate environment.
“The smartest mortgage strategy isn’t built around guessing the next rate move. It’s built around protecting cash flow, creating flexibility and making sure the mortgage still works if the market moves against you.”
That can mean looking beyond the headline rate when comparing mortgage options, including how much room there is in the household budget if borrowing costs move higher or if circumstances change.
For now, the Fed’s decision is another factor for Canadian mortgage borrowers to watch, rather than a clear signal that fixed mortgage rates are about to move sharply higher. The bigger question is where bond yields go from here as markets digest the Fed’s policy and incoming economic data.
You May Also Like
- This 7-step plan from Dave Ramsey is designed to help you ditch debt, save more and build wealth — here’s how it works
- Prioritize these 4 critical investments and watch your net worth skyrocket
- Here are 8 solid money moves that could free up real cash every month — here's where to start
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
The most expensive financial mistakes are often the ones you don't see coming. Join 19,000+ Canadians who get the money moves, risks and opportunities shaping their finances — delivered free each week. Subscribe now.
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.
