Lock In or Wait? Why Two Big Banks Say Rates Are Going Up in October

 

Published September 2, 2026

The Bank of Canada did exactly what all 35 economists in Reuters' latest poll expected today: it held its overnight rate at 2.25% for a sixth straight decision, keeping the prime rate at 4.45%. Bond markets had priced in barely a 3% chance of anything else.

What's not settled is what happens next — and on that question, Canada's biggest banks are more split than they've been all year. Four of the Big Six expect the Bank to sit tight through the end of 2026. Two expect it to start hiking as soon as October. If you're renewing a mortgage in the next few months, that gap isn't academic — it's the difference between locking in now and gambling on a rate cycle turning against you.

The Split, Bank by Bank

Here's where the six largest banks stand on where the overnight rate lands by the end of 2026:

Bank	Year-end 2026 call	Stance
BMO	2.25% (hold)	Hold camp
CIBC	2.25% (hold)	Hold camp
RBC	2.25% (hold)	Hold camp
TD	2.25% (hold)	Hold camp
National Bank	2.75% (hike Oct & Dec)	Hike camp
Scotiabank	2.75% (hike Oct & Dec)	Hike camp

Both National Bank and Scotiabank see the Bank of Canada moving to 2.50% in October and 2.75% before year-end — a full 50 basis points above where the four other big banks expect the rate to sit.

Why the Disagreement?

The split really comes down to which economic story each bank believes is driving the Bank of Canada's hand right now — and there are three competing ones on the table.

The hold camp points to the trade war: talks with Washington collapsed on August 22, 50% tariffs are now in effect on a large slice of Canadian exports, and the flash estimate for July GDP showed essentially no growth once those tariffs kicked in. Their argument is that hiking into a deteriorating trade relationship would pile more pain onto businesses already absorbing tariff costs.

The hike camp is reading the inflation and yield signals instead. Annual inflation climbed to 3% in July, above the Bank's 1–3% target band's midpoint, and Canada's economy actually grew a healthier-than-expected 0.8% in the second quarter — both of which argue for less patience, not more. Layered on top: the five-year Government of Canada bond yield has drifted up to roughly 3.18–3.25% recently on hawkish signals out of the U.S. Federal Reserve's Jackson Hole gathering, and because fixed mortgage rates are priced off that yield plus a lender spread, upward pressure there pushes fixed rates higher even while the Bank of Canada sits still.

It's also worth noting this isn't a fringe view. The Reuters poll found that even among the broader group of economists forecasting a September hold, 47% expect at least one rate hike by the end of the second quarter of 2027. The disagreement is about timing, not whether a hike is coming eventually.

What It Means for You

If you're renewing a variable-rate mortgage soon: The lowest 5-year variable rates are sitting around 3.35% today. If the hike camp is right and the overnight rate climbs to 2.50% by October, a $400,000 variable mortgage could see payments rise by roughly $200–$240 a month. That's the risk you're carrying by staying variable through the fall.

If you're renewing a fixed-rate mortgage: You're less exposed to the Bank of Canada's next move directly, but not immune — fixed rates are already drifting up with bond yields, independent of what the Bank decides in October. Waiting for a "better" fixed rate later this year isn't a sure bet either way.

For landlords carrying mortgages on rental units, the calculus is the same math with higher stakes: a $200–$240 monthly swing on one property becomes a multiple of that across a portfolio, and it's worth running both scenarios — hold and hike — before your renewal date arrives rather than after.

There's no universal right answer here, and anyone telling you otherwise is guessing along with the banks. But the practical takeaway is this: if a rate hold is what's keeping your current variable rate attractive, that comfort has an expiry date attached to it for two of Canada's six largest lenders. Talking to your mortgage provider about a rate hold or locking in a fixed term before October isn't a bad use of an afternoon.

What to Watch Next

Mark these dates: the Bank of Canada releases its Summary of Deliberations from today's meeting on September 16, giving a first real look at how divided the Governing Council itself was. The next scheduled rate decision falls on October 28 — the exact meeting National Bank and Scotiabank are betting will bring the first hike. We'll be tracking it here.

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This article is for general information and does not constitute financial advice. Mortgage rate forecasts are estimates from bank economists and are subject to change. Speak with a licensed mortgage professional about your specific situation.