CMT Mortgage Digest: Higher rates, weaker hiring & shifting housing markets

Canada’s mortgage market ended the week with competing signals: employment fell again, while major banks continued raising advertised borrowing rates. Regional housing reports showed softer activity, and RBC warned that the improvement in ownership affordability could soon give way to renewed pressure.

Here’s a roundup of CMT’s coverage from Oct. 5 to 11, including the latest Newsdesk briefs, key housing stories and what to watch in the Thanksgiving-shortened week ahead.

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Mortgage rates kept climbing

RBC, BMO and CIBC were among the banks raising advertised rates last week as lenders continued repricing following September’s rise in bond yields.

RBC increased fixed rates by 10 to 20 basis points and narrowed discounts on new five-year variable mortgages. BMO raised several three- and five-year offers, while CIBC lifted fixed rates by 15 to 20 basis points and advertised variable rates by 10 basis points.

CIBC’s increases came even as the five-year Government of Canada yield eased following Friday’s weak jobs report. These updates reflect rates advertised directly by the banks, rather than offers available through the mortgage broker channel.

Meanwhile, borrowers continued moving away from longer fixed terms. National Bank reported that fixed mortgages with terms of five years or longer accounted for just 8.8% of new originations in July, the lowest share in its series dating back to 2013. Shorter fixed terms and variable mortgages accounted for the remaining 91.2%, potentially making future policy-rate changes felt more quickly through earlier renewals or rates linked to prime.

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Weaker hiring meets persistent inflation concerns

Canada lost 68,000 jobs in September, pushing unemployment to 6.5%. Combined with August’s decline, employment fell by approximately 110,000 over two months.

Public sector employment fell by 70,000, with losses concentrated in education, health care and social assistance. Manufacturing employment also declined. Average hourly wage growth for full-time permanent employees edged up to 2.3%.

FULL COVERAGE

Canadian employment falls by 68,300 amid public sector decline

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Inflation concerns nevertheless remained elevated. A Nanos poll for Bloomberg found that 54% of Canadians expected inflation to be higher than the current 3% a year from now, compared with just 7% who expected it to be lower.

CIBC offered a different perspective on the policy outlook, arguing that Canada faces a weaker case for rate hikes than the United States. Its analysis pointed to inflation pressures concentrated in gasoline and an economy with more slack to contain broader price increases. The bank still sees the possibility of Canadian hikes in 2027, with timing dependent on domestic conditions.

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Regional housing markets soften, but price trends differ

September’s regional housing reports showed slower sales and varying degrees of price pressure.

Toronto: Home sales fell 5.2% from August on a seasonally adjusted basis, while the benchmark price declined 0.5%, its second consecutive monthly decrease. Higher borrowing costs and uncertainty over employment continued weighing on demand.

Montreal: Sales fell 12% from a year earlier as active listings climbed 20%. Median prices were largely unchanged, illustrating how slower activity has yet to produce the same price response across markets.

Ottawa: New listings rose 38.1% from August, far exceeding the typical seasonal increase. The composite benchmark price fell 2.2% month over month to $623,500, although the board cautioned that one month does not establish a sustained price trend.

Vancouver: September’s sales fell 8.4% from a year earlier and 25% below the 10-year seasonal average. The composite benchmark price fell 5.5% year over year and 0.6% from August to $1,075,900. Inventory remained 24.3% above its long-term average, despite declining from a year earlier.

Nationally, RBC warned that affordability gains are losing momentum. Its ownership-cost-to-income measure improved only slightly in the second quarter, with income growth providing the entire gain. Rising mortgage rates now threaten to reverse some of that progress.

Asking rents continue to fall. Average Canadian asking rents declined 4.2% year over year to $2,034 in September, marking their 24th consecutive annual decrease. However, Rentals.ca and Urbanation reported signs of stabilization in Toronto and Vancouver as supply pressures ease. Read the rental-market report

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Ottawa announces a $2-billion retrofit package

The federal government unveiled a $2-billion home retrofit plan combining heat-pump rebates with support for apartment-building upgrades.

Eligible households earning below the median income could receive up to $10,000 toward an electric heat pump, while other qualifying households would receive $2,000. The package also includes financing support through CMHC and the Canada Infrastructure Bank for multi-unit retrofits.

The announcement follows last year’s closure of the Canada Greener Homes Loan. Application launch dates and full eligibility details have yet to be provided.

FULL COVERAGE

Ottawa unveils $2-billion home retrofit plan

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Also in the news…

Foreign-homebuyer ban under review. Finance Minister François-Philippe Champagne said Ottawa is considering its options ahead of the ban’s scheduled Jan. 1, 2027 expiry. The review comes amid debate over whether changes could help attract capital for new housing construction. Read the full story

Large rebates can still leave a closing-day cash gap. Ross Taylor’s examination of new-home tax relief highlighted a practical financing issue: qualifying for a rebate does not mean the money will be available at closing. Builder credits, payment timing and lender or insurer treatment can all affect how the deal is structured. Read the rebate analysis

FSRA revokes 24 brokerage licences. Ontario’s financial services regulator revoked the licences after the firms failed to submit their Annual Information Returns despite repeated reminders and enforcement warnings. Read the brief

MPC begins a leadership transition. Mortgage Professionals Canada welcomed its 2026–2027 board, with Kuljit Singh succeeding Maxime Stencer as chair. The incoming board will also oversee the search for a new president and CEO following Lauren van den Berg’s decision to step down after more than four years. Van den Berg will assist with the transition as the senior team continues overseeing day-to-day operations. Meet the incoming board | Read the CEO transition story

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The Thanksgiving-shortened week ends with two key Canadian housing releases. Before then, U.S. inflation will be an important report for bond markets.

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Last modified: October 12, 2026