Market update: how interest rate changes actually reach house prices
Doorvia Research · September 9, 2026
Policy rate decisions move variable mortgages immediately and fixed mortgages through the bond market - with a lag before prices react.
The Bank of Canada sets the policy interest rate, which flows directly into lenders' prime rates. Variable-rate mortgages and home equity lines of credit reprice almost immediately when prime changes.
Fixed mortgage rates work differently. They follow Government of Canada bond yields, which reflect expectations about future inflation and rate policy. That is why fixed rates sometimes move before the Bank of Canada acts at all.
Prices respond last. Lower borrowing costs raise the amount a household can finance, but the effect appears over months as buyers requalify, sellers adjust asking prices and inventory clears. Focus on your own qualification and carrying cost rather than predicting the next announcement.
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