Mortgage borrowers who have been holding out for lower interest rates are now finding they have run out of time, say industry professionals.

Fixed-rate mortgages, which are influenced by market conditions and government bond yields, have been drifting higher, rising from a range of mid-3 per cent this fall to low 4 per cent now.

“Over the past few months, I’ve seen clients turn down fixed-rate renewal offers around 3.7 per cent because they were convinced rates would keep falling,” said Leah Zlatkin, a mortgage broker and

LowestRates.ca expert. “Now those same borrowers are coming back and finding that the best available rates start with a four. That delay is already resulting in higher monthly payments.”

By the end of 2026, more than a third of Canadian homeowners will renew their mortgages, many of them at higher rates from the lows of the pandemic.

Over the past year, variable rates have dropped more than fixed, from 7 per cent in June 2024 to slightly below 4 per cent as the

Bank of Canada cut its benchmark rate. However, further relief on this front now looks unlikely with the central bank expected to keep rates steady this year or, as some believe, raise them by year end.

Meanwhile, fixed rates have fallen just slightly more than 100 basis points, with five-year terms less than that.

Bond yields have been pushed higher recently by the central bank’s decision to keep rates on hold and economic data beating expectations. They can also be influenced by inflation, public deficits and international financial conditions.

Because fixed rates are dictated by market conditions delays could lead to higher rather than lower rates, said Zlatkin. And even a small increase in a rate can add up to higher monthly payments, especially for homeowners with larger mortgages.

One surprising trend in Canada has been the decline in popularity of the five-year term, a traditional preference, said Hendrix Vachon, Desjardins Group principal economist, in a recent report.

Before the pandemic, about 30 per cent of new financing was on a five-year or more term, but between 2022 and 2025 that share dropped to 15 per cent, according to data from the Bank of Canada.

The most popular mortgages now are fixed rate with terms between three and five years, accounting for nearly 40 per cent of mortgages, he said.

Zlatkin said choosing a shorter term can help borrowers secure today’s rates while leaving room to adjust if conditions change.

Homebuyers should also take heed. In the current buyer’s market, negotiating a better price can help offset mortgage rates, but timing still matters.

“Homeowners who value predictable payments shouldn’t be waiting for a perfect moment,” she said. “In this environment, waiting can mean paying more while gaining very little in return.”

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Today’s chart from Royal Bank of Canada gives us a picture of just how bad Toronto’s condo market has become. Pre-construction sales in 2025 were down 90 per cent from the average over the nine years before 2024, said RBC.

“The Greater Toronto Area’s new condominium development sector has entered a deep freeze with pre-construction sales plummeting to levels not seen since the global financial crisis,” wrote Robert Hogue, RBC assistant chief economist, in a report in September.

This spells trouble for housing construction, said the bank. It expects housing starts to fall more than 10 per cent nationally in 2026 and even more in 2027, despite government efforts to bolster the country’s housing supply.

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McLister on mortgages

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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