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A buyer asked me last week to hold his offer until after the September 2 announcement, because he'd heard a cut was coming. Markets put the odds of a cut at roughly zero and nine bank forecasts now have the next move going up. Here's the actual math on waiting, and on fixed versus variable.
A buyer called me last week and asked whether we could sit on his offer until after September 2. He'd read that the Bank of Canada was meeting, he'd heard a cut was coming, and he figured a few weeks of patience was worth a lower payment for the next five years.
I understood the instinct. It's the same instinct that kept a lot of people out of this market through all of 2024. But I told him what I've been telling everybody who asks me some version of this question lately, which is that the thing he's waiting for is not on the schedule.
So let's go through it properly. What the market is actually pricing for September, what the banks are forecasting after that, and what any of it does to a real payment on a real Windsor house.
The Bank of Canada held its policy rate at 2.25% on July 15. That was the sixth consecutive hold, stretching back to last October, and it's the longest run of stability we've had since before the hiking cycle started. Lender prime has sat at 4.45% through the whole thing.
The next scheduled announcement is September 2, and here is what traders think happens. Prediction markets have a hold priced anywhere from 94.5% to 99% depending where you look. LSEG had it near 97% at the end of July. One brokerage publishing daily odds had it at 76% hold and 24% hike, with a cut sitting at zero.
Read that last one again. Not a low probability of a cut. Zero. The only live question in the market right now is whether the next move is up, and how far away it is.
I went through the published forecasts, because this is the part that should settle the argument for anyone still holding out:
Nine forecasts. Not one of them contains a cut. RBC's own economist put it about as plainly as a bank ever does, describing the plan as holding rates at borderline accommodative levels through 2026 before improving conditions prompt moderate hikes in 2027.
Here's the argument almost nobody bothers to explain, and once you see it the rest of this makes sense.
The Bank publishes an estimate of the neutral rate, meaning the level that neither stimulates the economy nor holds it back. That range is 2.25% to 3.25%. The policy rate is 2.25%.
The Bank is sitting at the absolute floor of its own neutral range. Cutting from here is not easing off the brake. It's actively stimulating an economy that no longer looks like it needs the help, with inflation risk still sitting on the table. That is a completely different decision from the ones they made in 2024 and 2025, and it's why the bar for another cut is so much higher than people assume.
The data isn't helping the cut case either. May GDP came in at 0.3% growth when 0.1% was expected, April got revised up to 0.6%, and the second quarter is tracking somewhere around 0.8%, which annualizes to roughly 3.4%. The recession talk that dominated last year is gone. Employment is up 88,000 jobs year over year and wage growth is running at 3.3%. The next real test is the second quarter reading on August 28, a few days before the decision.
The Bank of Canada is already at the bottom of its own neutral range. It isn't holding rates high and waiting for a reason to cut. It's holding them low and watching for a reason to raise.
This is the piece that trips up nearly every person I explain it to, and it's the reason the September decision matters less to a buyer than the headlines suggest.
Variable rates move with prime, and prime moves with the Bank of Canada. That link is direct and immediate. Fixed rates do not work that way at all. They follow Government of Canada bond yields, and the bond market does what it wants.
The five year Canada bond yield has pushed into the 3.2% range, driven by a stronger economy, higher energy prices, and a US Federal Reserve that held its own rate while core inflation there ran above 3%. Elevated yields are exactly why fixed mortgage rates have not come down despite a policy rate that's been parked for the better part of a year. Most lenders pushed their five year fixed pricing back above 4% in the last couple of weeks.
So if you're holding off on a purchase hoping for a cheaper fixed rate, the Bank of Canada is not the institution you should be watching. And the bond market has been moving against you rather than for you.
Numbers as of the second week of August, because half the confusion I hear comes from people working off a quote they got in the spring:
That last line is the one I'd stare at. The gap between the best available five year fixed and the national average five year fixed is nearly a full percentage point. Whatever the Bank of Canada does on September 2 is worth a fraction of what you'd pick up by making three phone calls.
Let's put a dollar figure on the thing that buyer wanted to wait for, using a real Windsor purchase.
The average sale price across Windsor-Essex in June was $545,413. Put 20% down and you're financing about $436,000. At a five year fixed of 4.04% over 25 years, that payment runs roughly $2,305 a month.
Now imagine the cut arrives and flows straight through to fixed pricing, which it wouldn't, but let's be generous about it. A quarter point off takes that payment to about $2,246. You waited a month and gained $59.
Meanwhile the best insured five year fixed moved ten basis points in the last week on its own, with the Bank of Canada doing nothing at all. And in this market the house you wanted in July is frequently gone by September. Fifty nine dollars a month is not a strategy. It's a rounding error you paid for with a month of your life and possibly the house.
Step away from your own payment for a second, because a long hold has consequences for the housing market here, and most of them run in a buyer's favour.
Windsor-Essex is carrying 2,237 active listings, the highest June figure in more than a decade, and roughly one in three of those homes is actually selling. At the same time we're sitting at 3.9 months of inventory, the tightest in Ontario, with Hamilton at 4.8 and Niagara at 5.2. June sales were up 8.1% year over year and cracked 500 for the first time since last autumn. The benchmark price is up 1.7% to $586,600 while most of the province is flat or falling.
A parked rate is what makes that combination workable. When everybody expects cuts, buyers sit on their hands and sellers hold out for a spring that never quite arrives, and both sides burn a year waiting on each other. When the rate isn't moving and nobody credible is forecasting that it will, people start transacting on their actual circumstances instead of on a guess about monetary policy. That's a healthier market to buy in, even if it feels a lot less exciting than a cutting cycle.
It also means the inventory advantage buyers have right now is not about to be wiped out by a rate move in the fall. That leverage is yours for a while yet, and it's worth using rather than waiting out.
The more useful question is not what the Bank does in September. It's which term you take, given that nobody expects a cut and several people expect hikes. I won't tell you which one to pick, but I can lay out the math I walk clients through.
Take the renewal case I used a couple of weeks ago, a $335,000 balance with 20 years left on it. The full breakdown is here if you want it, including the rule change that lets you leave your bank without requalifying.
At 4.04% fixed, that payment is about $2,031. At 3.45% variable, it's about $1,930. Variable saves you roughly $100 a month today, and that's real money in your account every month.
Now stress it. If prime rises a quarter point, your variable payment goes to about $1,972, still $59 below the fixed. Two quarter point hikes puts you near $2,015, still $16 below. It takes three hikes before variable costs you more than locking in at today's fixed rate.
Three hikes is 75 basis points, which would put the policy rate at 3.00%. Go back to the forecasts. The most hawkish bank in the group has us there by the end of 2027 and most of them never get there at all. So on the current consensus, a variable holder spends this year and most of next year ahead before the risk even turns into a cost.
That is an argument for variable, not a guarantee. The entire point of a variable rate is that you're accepting the chance of being wrong in exchange for a lower payment today. And the three year fixed near 3.85% is a legitimate third answer that plenty of people never consider. It's cheaper than the five year, and it puts your next renewal in 2029 instead of locking you into today's elevated pricing for half a decade.
Here's a wrinkle that almost never comes up and probably should, because it changes what you can afford rather than just what it costs you.
When a lender qualifies you, they don't use your actual rate. They use the greater of your contract rate plus two percent, or 5.25%. So at a five year fixed of 4.04%, you're being tested at 6.04%. Take the variable at 3.45% and you're tested at 5.45% instead.
That's about sixty basis points of difference in the qualifying math, and it works out to roughly five percent more borrowing room. On a typical Windsor purchase that's somewhere near $25,000 of additional budget, which in this market is often the difference between the house with the finished basement and the one without.
I'm not telling you to pick a variable rate to game a stress test. Plenty of people should not be in a variable at all, and extra qualifying room is exactly how borrowers end up in over their heads. But if a lender has told you that you can't afford a particular price point, it's worth asking your broker to run the numbers both ways before you accept that as the final answer. The renewal article I linked above walks through the qualifying rules in more detail, including the exemption that lets you switch lenders without being tested again.
I'd rather flag this myself than have you read the last section as a prediction.
The scenario where a cut does happen is real, it just isn't the one people are describing. If US tariffs broaden out, business investment stalls, and Canada slides into an actual recession, the Bank cuts and prime drops to 4.20%. That would be a cut you get for a bad reason, arriving in a market where you'd likely be more worried about your job than your payment.
The other thing I can't tell you is where bond yields go. If Middle East tensions ease and energy prices come off, yields fall and fixed rates fall with them, no Bank of Canada involvement required. That is genuinely unpredictable and I'm suspicious of anyone who says otherwise.
Which is why the decision shouldn't rest on a forecast in the first place. The real question is whether your budget survives a payment increase. If a couple of hundred dollars a month would break you, take the fixed rate and stop reading rate articles. If you've got room to absorb it, variable is priced attractively and the odds are currently on your side.
Pick your mortgage based on what your budget can absorb, not on what you think the Bank of Canada does next month. One of those things is knowable and the other one isn't.
Here's what I told that buyer, and what I'd tell you if you're sitting on a decision until September 2.
Get a rate hold. Most lenders will hold pricing up to 120 days and it only ever works in your favour, because if rates rise you keep the hold and if they fall you take the lower number. Collect two or three quotes instead of accepting the first one, since a full point separates the best rates from the national average. Then make the decision about the house on whether it's the right house.
The wider backdrop here is still genuinely favourable, and I went through where prices, inventory and demand actually sit in my 2026 forecast for Windsor-Essex. If you're buying your first place, the programs available to first time buyers in Ontario will do far more for your budget than a quarter point ever could, and the buying process from financing to closing is laid out step by step if any of this is new to you.
Two practical things to do this week instead of waiting on a central bank. Run your own numbers with the mortgage calculator so you know what a payment looks like at 4.04% and at 3.45%. And if you're comparing towns, keep in mind that taxes and utilities can swing your monthly cost by more than a rate move does. I broke down what each municipality in the county actually charges, because a house in LaSalle and a house in Tecumseh at the same price do not cost the same to own.
Then go look at what's out there. Search by what matters to you rather than by what a headline says the market is doing. And if selling is part of the picture, a free home evaluation will tell you what your current place is worth before you commit to anything. Give me a call and we'll work through the whole thing together.
A data-backed market opinion based on recent Windsor-Essex sales — back in the next few hours.
Whether you’re selling a waterfront estate, buying your first home, or quietly building a portfolio — start with a private call.
