BANK OF CANADA HOLDS AT 2.25% FOR A SEVENTH STRAIGHT MEETING
The Bank of Canada held its overnight rate at 2.25% on Wednesday, September 2, the seventh consecutive hold stretching back to December 2025. The decision keeps prime rate at 4.45%. July’s inflation reading, the most recent available, came in at 3.0% year over year, up from 2.8% in June and sitting at the top of the Bank’s comfort range, while core inflation held closer to 2%. The hold arrives against a fresh round of trade tension: the US imposed 50% tariffs on close to $20 billion of Canadian exports in late August, and Ottawa’s counter-tariffs take effect September 8.
The Bank is caught between two problems that pull in opposite directions. Tariffs are adding upward pressure on prices at the same time they’re weighing on growth, so the usual playbook of cutting rates to support the economy is off the table for now. Variable rates and HELOCs are tied directly to the policy rate, so they aren’t moving. Fixed rates work differently: they follow the bond market, not the Bank’s rate, and bond yields have been climbing on their own. The two-year Canadian yield rose to 3.048%, and the 10-year yield has climbed roughly 35 basis points since early summer, pushing fixed mortgage pricing higher even with the policy rate unchanged. Economists are split on what comes next. Some, including BMO’s Benjamin Reitzes and Capital Economics’ Stephen Brown, think a hike as early as December is on the table. Others, including RBC and CIBC, expect the Bank to stay on hold well into 2027.
What this means for your mortgage: If you’re on a variable rate or a HELOC, nothing changes this month, prime stays at 4.45%. If you’re comparing fixed rate options or renewing soon, the bond market has been moving even while the policy rate sits still, so it’s worth locking in a rate hold to protect your pricing. Fixed rates have been slowly rising since the end of February. Lowest five-year fixed rates are sitting around 3.69% to 4.09% depending on the lender and insurability, with five-year variable around 3.35% to 3.50%.
CANADA SHEDS 41,700 JOBS IN AUGUST
Statistics Canada reported that the economy lost 41,700 jobs in August. The national unemployment rate held at 6.4%, but the losses were concentrated in Ontario and Quebec. Finance, insurance, and real estate shed close to 10,000 positions, and the public sector cut 20,000 jobs, bringing total public sector losses to 78,000 since May. Manufacturing was the one bright spot, adding 22,100 jobs. Layoff rates in export-dependent industries have climbed to 0.9% over the past year, compared with 0.7% elsewhere.
The timing matters: this data came out just two days after the Bank of Canada’s rate hold, and it complicates the case for a near-term hike. Dominique Lapointe of Manulife Investment Management noted that if the Bank’s recent tone was meant to signal an upcoming increase, these numbers suggest that warning may have come too early. A weaker labour market, particularly one concentrated in trade-exposed sectors and Ontario specifically, gives the Bank another reason to stay patient.
What this means for your mortgage: Softer job numbers generally take pressure off the Bank to raise rates, which is good news if you’re on variable or planning to renew into one. It doesn’t change anything about the current hold, but it’s a data point worth watching if you’re deciding between fixed and variable for an upcoming purchase or renewal.
GTA HOME SALES FALL FOR THE FIRST TIME IN SIX MONTHS
The Toronto Regional Real Estate Board reported 5,057 home sales in the GTA in August, down 2.1% year over year and the first decline after a five-month run of gains. The average price of a home sold across the GTA, all types combined, fell 2.7% to $993,410, only the second time this year it has dipped below $1 million. The composite benchmark price fell 4.5% year over year to roughly $931,200, with York Region down 6.2%, the City of Toronto down 3.7%, and Halton down 3%. New listings fell 14.1% and active listings fell 11.3%, while detached and semi-detached sales held up better than townhouses and condos.
TRREB’s Jason Mercer pointed to trade war anxiety, not affordability, as the main thing keeping buyers on the sidelines this month. Buyers are worried about what tariffs could mean for inflation and borrowing costs down the road, and that uncertainty is outweighing the fact that prices and the five-year fixed rate, holding around 4.8%, haven’t moved much either way.
What this means for your mortgage: The average price across the GTA is back under $1 million, and tighter listings are keeping the market from tipping too far in either direction. If you’ve been waiting for a clearer entry point, this is close to it, though buyers should still expect the same qualifying math as before, since rates themselves haven’t moved.
WHERE THINGS STAND
If you have a variable rate product, mortgage or HELOC, nothing changes for you this month. If you’re comparing fixed rate options or coming up on a renewal, it’s worth locking in a rate hold, fixed rates have been slowly rising since the end of February. And if things have changed for you and you’re not sure your current mortgage still fits your situation, reach out and we’ll take a look together.
Call or text 249-480-1249. HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources: Bank of Canada; Statistics Canada; Toronto Regional Real Estate Board (TRREB); Canadian Mortgage Professional; Bloomberg/CMT News; Ratehub.ca