Rising mortgage rates are not a rent increase notice, but they can put pressure on the people who own rental homes. The five-year Government of Canada bond yield, which fixed mortgage rates follow, has climbed from about 2.7% in late February 2026 to about 3.6% in early October, according to Bank of Canada data through October 2, 2026 and Canadian Mortgage Trends on October 1, 2026. This post separates what the data show for renters from what is still only a plausible link.
Why are mortgage rates rising again, and by how much?
Five-year fixed mortgage rates are rising because the bond yields they track have jumped, not because the Bank of Canada has changed its policy rate. A basis point is one-hundredth of a percentage point. Canadian Mortgage Trends reported on September 12, 2026 that several major banks had raised fixed rates by 10 to 20 basis points, and a broker it quoted said some lenders had gone up by 20 to almost 100.
National Bank economists noted that the five-year yield jumped 16 basis points in one day to 3.65%, its highest level since May 2024, in a note reported by Better Dwelling in September 2026. The same note found that the gap between mortgage rates and the bond yield, known as the lender spread, has narrowed from an average of 135 basis points since late 2023 to 75. In plain terms, lenders have absorbed part of the increase so far, and the economists called a spread this narrow likely unsustainable in the long run. Yields move daily, so treat every figure here as a snapshot from the date given.
What is the market expecting from the Bank of Canada?
The Bank of Canada held its policy rate at 2.25% on September 2, 2026, and its next decision is on October 28, 2026, according to the Bank of Canada’s key interest rate page. Financial markets, however, are betting on higher rates ahead.
Canadian Mortgage Trends reported on October 1, 2026 that the overnight index swap market, a market-based gauge of expected policy rates, was pricing in 100 basis points of Bank of Canada hikes over the next 12 months. That is roughly four quarter-point increases. A September 12 report cited the bond market anticipating four hikes. Market pricing is a bet, not a Bank forecast, and it changes daily. A rates.ca forecast page updated September 16, 2026 lists most major banks expecting the Bank to hold at 2.25% through year-end, with Scotiabank the exception, forecasting 2.50% by December.
The same October 1 report said the variable-rate discount is now more than one percentage point below comparable fixed rates, and a mortgage broker quoted there estimated that more than 60% of borrowers are now choosing variable, where about 60% historically took a five-year fixed term.
How exposed are homeowners to higher rates?
Many Canadian borrowers carry short-term or variable mortgages, so rate moves reach their budgets quickly. CMHC’s Observer article of September 8, 2026 on mortgage term choices reports that 35.5% of new uninsured mortgages in the first quarter of 2026 were variable-rate, and that 35% of consumers who renewed reported more financial pressure because of interest rate changes.
Two cautions apply. The survey behind the 35% figure was conducted in January 2026 and published on May 20, 2026 by CMHC, before yields began climbing in late February. CMHC’s results page puts the related finding as 35% of renewers facing higher payments, up an average of $375 a month. And both figures cover all mortgage holders, not only people who own rental properties.
Can landlords simply pass higher mortgage costs on to renters?
Not simply. Where a provincial cap applies, a landlord’s increase for a sitting tenant is limited to that cap, apart from narrow exceptions such as newer buildings or an approved application to the province’s tenancy authority. Caps differ by province, and Alberta has none, so the answer depends on where the rental is.
| Province | 2026 rule | Set for 2027 | Source | As of |
| Ontario | 2.1% guideline, only for units first occupied on or before November 15, 2018 | 1.9% guideline | Ontario government | Page updated June 23, 2026; read October 5, 2026 |
| B.C. | 2.3% maximum | 2.2% maximum | B.C. government | Page updated August 27, 2026 |
| Manitoba | 1.8% guideline, effective January 1, 2026 | 3% guideline, effective January 1, 2027 | Manitoba Residential Tenancies Branch | Read October 5, 2026 |
| Prince Edward Island | 2% cap, effective January 1, 2026 | 2.1% cap, effective January 1, 2027 (2027 notice) | PEI Residential Rental Property office | Read October 5, 2026 |
| Alberta | No cap on the amount of a rent increase; at least 12 months between increases | No cap | Alberta government | Read October 5, 2026 |
| Quebec | 3.1% base percentage in the Tribunal’s rent-setting calculation, a reference rather than a legal cap | No 2027 figure published yet | Tribunal administratif du logement | Read October 5, 2026 |
Saskatchewan, Nova Scotia, New Brunswick, and Newfoundland and Labrador are not covered here; check each province’s tenancy authority before relying on any figure. Caps also leave a gap: CMHC’s 2026 Mid-Year Rental Market Update, published June 9, 2026, says average rents paid by tenants keep rising mainly when a unit turns over, so new tenancies are where market conditions bite. The same update found asking rents declining in Toronto, Vancouver, Calgary, and Ottawa.
Could investor sales lead to more N12 evictions in Ontario?
It is a plausible mechanism in Ontario, but none of the sources found measures it, and the Bill 60 compensation change in force since September 21, 2026 does not apply to sales. This section covers Ontario only; N12 notices and Bill 60 do not apply in other provinces.
An N12 is the Landlord and Tenant Board notice used when a landlord, a purchaser, or a family member requires a rental unit. For a sale, an agreement of purchase and sale must exist, and the purchaser must in good faith require the unit for themselves or a spouse, child, or parent, Tribunals Ontario’s Interpretation Guideline 12 explains. The tenant is owed one month’s rent or another acceptable unit regardless of notice length.
For notices served on or after September 21, 2026, a landlord who gives at least 120 days’ notice to end a tenancy for their own use no longer owes that compensation. The Landlord and Tenant Board’s September 21, 2026 update states that the change does not apply to a purchaser’s own use. So a sale to an owner-occupier still triggers compensation, and a sale to another investor does not fit the purchaser-use N12, which requires the buyer to need the unit for themselves or family.
Are more condos coming onto the rental market?
Investor-owned condos are competing for tenants in larger markets, and CMHC describes that competition as newly completed condominium apartments rented out. The 2026 Mid-Year Rental Market Update says that in Toronto and Vancouver many of these units “couldn’t be absorbed in the ownership market,” and that vacancy is highest in structures built after 2020.
For renters, the measured effect so far is softer pricing: CMHC reported landlords offering incentives such as free parking, gift cards, and move-in credits, and asking rents falling in several large cities. Whether higher carrying costs push more investors to rent out units they cannot sell is a hypothesis; the sources found do not measure it.
Will landlords on variable mortgages raise rents?
No source found shows a rent increase caused by a mortgage rate, and none measures how many landlords hold variable-rate mortgages. What is documented is who owns rentals: Statistics Canada, in a study released July 7, 2026 using 2022 data, found small-scale individual investors owned around half of the assessed value of rental properties in Ontario (52.6%) and B.C. (49.4%).
That makes small owners’ financing costs relevant, but it is an ownership fact, not proof of a rent effect. CMHC adds that rent growth tends to fall below inflation when vacancy is high, and caps limit what sitting tenants can be asked to pay. The table below shows where the evidence stops.
| Link in the chain | What a source shows | What no source shows |
| Investor sales lead to more N12 evictions (Ontario) | Purchaser-use N12 rules and compensation (Tribunals Ontario, September 21, 2026) | Any count of N12 notices tied to mortgage rates |
| Condos flood the rental market | Newly completed condos rented out, many not absorbed by the ownership market; asking rents falling in four large cities (CMHC, June 9, 2026) | That higher rates are driving the supply |
| Variable-rate landlords raise rents | 35.5% of new uninsured mortgages variable (CMHC); small investors own the most rental value (Statistics Canada, July 7, 2026) | How many landlords are variable, or any rent change that followed |
What should renters and landlords watch next?
The next dates to watch are the Bank of Canada decision on October 28, 2026 and CMHC’s Rental Market Report, scheduled for December 8, 2026 on CMHC’s reports calendar. Renters should keep any rent increase notice in writing and check it against their province’s rule; landlords should do the same before serving one.
liv.rent aims to be a plain place to connect these dots: the numbers in its monthly rent reports read alongside the rules in its rental laws guides, with a separate landlord section for the owner’s side. For B.C. renters, there is also a guide to rent increase rules in B.C.
This post is general information, not legal or financial advice. Rules and rates change; confirm with the provincial tenancy authority or a qualified professional before acting.
Do rising mortgage rates mean my rent will go up?
Not automatically. No source we found links a mortgage rate to a specific rent increase. In provinces with a cap, such as Ontario, B.C., Manitoba, and Prince Edward Island, a landlord’s increase for a sitting tenant is limited to the cap, with narrow exceptions. Alberta has no cap, and rents at a new tenancy follow the market.
Why are fixed mortgage rates going up when the Bank of Canada has not changed its rate?
Fixed mortgage rates follow the five-year Government of Canada bond yield, not the Bank of Canada’s policy rate. The yield rose from about 2.7% in late February 2026 to 3.60% on October 2, 2026, per Bank of Canada data, and lenders raised fixed rates in response. The Bank held its policy rate at 2.25% on September 2, 2026.
Can my landlord raise my rent because their mortgage is more expensive?
Only within your province’s rules. In Ontario, the 2026 guideline is 2.1% (1.9% for 2027) for units first occupied on or before November 15, 2018, and in B.C. the 2026 maximum is 2.3% (2.2% for 2027). Alberta has no cap. A higher mortgage payment does not automatically let a landlord exceed a cap. Check your province’s tenancy authority.
Does Ontario's Bill 60 make evictions cheaper when a rental home is sold?
No, not for sales. For notices served since September 21, 2026, a landlord giving at least 120 days’ notice for their own use no longer owes compensation, but the Landlord and Tenant Board says this does not apply to a purchaser’s own use. A tenant given an N12 for a buyer is still owed one month’s rent or another unit. Ontario only.
When is the next Bank of Canada interest rate decision?
The next Bank of Canada announcement is October 28, 2026, with its Monetary Policy Report. The Bank held its policy rate at 2.25% on September 2, 2026. Markets were pricing about 100 basis points of hikes over 12 months in an October 1, 2026 Canadian Mortgage Trends report, which is market pricing, not a Bank forecast.
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