She says today's rate could be the best one your client sees for a while
Mortgage brokers counting on a Bank of Canada rate cut may need to reset client expectations, according to Dr. Sherry Cooper, chief economist at Dominion Lending Centres (DLC), who sees higher borrowing costs over the next six to 12 months.
Speaking at the Women in Mortgage Summit Canada in Toronto on September 24, Cooper said a global selloff in US Treasuries, stubborn US inflation and Canada's tariff-driven price pressures leave the central bank little room to ease.
"So we'll be forced into raising interest rates. Not necessarily in October, but I think unfortunately probably by later this year or early the first half of next year," she said.
That is a sharper stance than she took in late August, when she expected the Bank of Canada to hold steady for the rest of the year.
Read more: MortgageFest Day 1 recap: Industry leaders on the path forward for brokers
Why bond markets are pushing mortgage rates higher
Cooper tied the shift to the US government's $40-trillion debt and to geopolitical instability. She said these have driven heavy selling of US Treasuries and pushed long-term yields sharply higher, a trend already feeding into Canadian fixed mortgage rates as the trade war escalates.
Canada's five-year bond yield, the benchmark for fixed-rate pricing, jumped 14 basis points in a single day this week, she said. "That's unheard of."
The US Federal Reserve lifted its benchmark rate 25 basis points to a range of 3.75% to 4% on September 16, its first hike since 2023. The Bank of Canada held its overnight rate at 2.25% on September 2 for a seventh straight meeting, while Statistics Canada put August inflation at 3%.
Read more: A BoC rate hike soon? One top economist isn't buying it
Cooper said Canada's fiscal footing is far stronger than that of the US, but warned that retaliatory tariffs will push domestic prices higher. The big banks are split on whether the Bank of Canada will hike this fall, with National Bank and Scotiabank projecting a move to 2.50% in October.
Tanya Woods, managing director and head of government and regulatory affairs at Questrade, shared that view. "Ultimately, rates will probably rise, but they're trying to hold as long as possible," she said.
Day 2 of #MortgageFestCanada 2026 is underway! 🚀 Alongside another day of insightful sessions and networking, we're proud to host the #WomenInMortgageCA Summit, bringing together industry leaders for conversations on leadership, growth, and the future of mortgage lending. ✨ pic.twitter.com/FfUGamICZh
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 24, 2026
What should brokers tell clients now?
"So it is a time when we should encourage anyone that is interested in potentially buying a home that they get pre-approved, because today's rates, even though they're a little above what they were last week and the week before, they're only going higher," Cooper said.
Most of the brokers she has worked with over the past 15 years, she noted, have never seen a bond bear market.
She added that "we have to expect higher interest rates, which also means that fixed-rate mortgages are very attractive now."
The Bank of Canada's next rate announcement is October 28.
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