Mortgage Rates Rise as Global Central Banks Tighten

Global interest rates moved higher again this week. The United States Federal Reserve and the Bank of Japan both increased rates by one quarter of a percentage point, while the Bank of England held steady. In Canada, advertised five year fixed mortgage rates climbed to approximately 4.39%, nearly a full percentage point above the lowest advertised five year variable rate. The Canadian dollar also weakened, and financing pressure remained visible in Vancouver commercial real estate.

Advertised Five Year Fixed Mortgage Rates Reach 4.39%

Nesto listed its lowest insured five year fixed mortgage rate at 4.39% and its lowest insured five year variable rate at 3.45% on September 17. These advertised rates are subject to qualification and can change without notice.

The difference between the two rates is approximately 0.94 percentage points. That is a meaningful gap, but it does not automatically make a variable mortgage the right choice. Fixed and variable mortgages respond to different parts of the interest rate market and carry different risks.

Fixed mortgage rates are influenced by Government of Canada bond yields, lender funding costs, competition, risk, and operating margins. Recent increases in global bond yields have placed renewed pressure on fixed mortgage pricing.

Three Central Banks, Three Important Decisions

United States Federal Reserve Raises Rates

On September 16, the Federal Reserve increased its target range by one quarter of a percentage point to between 3.75% and 4.00%. The Federal Reserve said economic activity remained solid and inflation was still elevated.

This decision matters in Canada because United States interest rates influence global bond markets, exchange rates, and investor demand. Higher United States yields can place upward pressure on Canadian bond yields and fixed mortgage rates, even when the Bank of Canada leaves its own policy rate unchanged.

Bank of England Holds at 3.75%

The Bank of England kept its policy rate at 3.75%. Six committee members voted to hold, while three preferred an increase to 4.00%. The central bank pointed to higher energy prices and the possibility that inflation could remain above target for longer.

The divided vote shows how difficult the current environment has become. Economic growth and household finances remain under pressure, but central banks are reluctant to ease when energy costs and inflation risks are rising.

Bank of Japan Raises Rates to a 31 Year High

The Bank of Japan increased its policy rate from 1.00% to 1.25%, its highest level since 1995. Japan spent decades with rates near or below zero, so this decision represents another significant step away from exceptionally loose monetary policy.

Together with the recent increases from the Federal Reserve and European Central Bank, Japan’s decision reinforces a broader global message. Inflation risks have returned, and major central banks are prepared to keep borrowing costs elevated when necessary.

The Canadian Dollar Declines for an Eighth Consecutive Day

The Canadian dollar traded near US $0.7138 on Friday, its lowest intraday level since August 7. It was on track for an eighth consecutive daily decline as the difference between Canadian and United States bond yields widened.

A weaker Canadian dollar can increase the cost of imported goods, construction materials, machinery, and travel. That can create additional inflation pressure even while parts of the domestic economy are slowing.

This creates another complication for the Bank of Canada. Lower rates could support households and economic growth, but they could also place more pressure on the dollar and raise the Canadian cost of imported products.

Vancouver Commercial Property Investment Declines 23%

Altus Group reported that Vancouver commercial real estate investment totalled approximately $3.5 billion during the first half of 2026, a decline of 23% from one year earlier. Activity weakened across most major property categories, while retail was the only major category to post modest annual growth.

Commercial real estate is different from the residential market, but the decline shows that higher financing costs and economic uncertainty affect more than homebuyers. Commercial investors may face more conservative valuations, larger equity requirements, and closer review of property income.

Self employed borrowers should also pay attention. When business income is connected to construction, development, real estate, or commercial leasing, lenders may ask for current financial statements and a clear explanation of recent business performance.

LNG Canada Could Decide on a Major Expansion in October

Partners in the Shell led LNG Canada project could make a final investment decision on the proposed Phase 2 expansion as early as October, according to a Reuters report citing people familiar with the project. The expansion would add another 14 million tonnes of annual export capacity and double the Kitimat facility’s total capacity to 28 million tonnes.

A positive decision could support substantial construction, trades, supplier, and service employment across British Columbia. It could also create opportunities for communities connected to the project and its supply chain.

For mortgage qualification, project based income still needs careful documentation. Lenders may review employment history, guaranteed hours, overtime, allowances, contract duration, and the likelihood that income will continue. Workers expecting to benefit from a new project should review their documents before making a purchase commitment.

What This Means for You

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