Prices held flat in August. Your mortgage rate did not

Canadian home sales slipped 0.7% in August and prices held flat, CREA says, while the 5 year bond yield that prices fixed mortgages climbed to 3.65%.

For a fourth month running, Canadian home sales and prices barely moved. What moved instead is what a mortgage costs.

What did CREA report for August?

Sales slipped 0.7% from July and came in 6.9% below August 2025, while the MLS Home Price Index was unchanged on the month and down 3% year over year, according to the Canadian Real Estate Association's release of 15 September. The national average sale price was $668,219, up 0.6% on the year.

Supply is the part that shifted. New listings rose 3.3% on the month, which pushed the national sales to new listings ratio down to 49.1% from 51.1% in July, against a long term average of 54.7%. There were 4.8 months of inventory at the end of August, unchanged for a fourth consecutive month and a little below the five month long term average, with just under 200,000 properties listed across the country.

CREA chair Garry Bhaura said the increase in new supply was "both broad based across all the largest markets and most apparent towards the end of the month", which he read as sellers getting an early start on the fall market.

Why does a fixed mortgage cost more than it did last week?

Because the bond market repriced, and fixed mortgages are funded there. The Government of Canada 5 year benchmark bond yield moved from 3.44% on 8 September to 3.65% on 14 September on the Bank of Canada's published series, which is 21 basis points in four trading sessions.

CREA's senior economist Shaun Cathcart said the same thing in the release: "For borrowers, fixed mortgage rates have already increased on higher bond yields."

Did the Bank of Canada change anything?

No, and that is the part worth understanding. The Bank held its target for the overnight rate at 2.25% on 2 September, with the Bank Rate at 2.5% and the deposit rate at 2.20%, and its next scheduled announcement is 28 October.

The policy rate is what feeds the prime rate. In the Bank's own explainer, changes in the policy rate lead to similar changes in short term rates, and "these include the prime rate, which is used by the banks as a basis for pricing variable-rate mortgages". Fixed rates are priced off the bond market instead. So the overnight rate can sit still for six weeks while the fixed side moves underneath it, which is what has happened since 8 September.

What does it change if you are buying in the GTA this fall?

Two things, and they pull in opposite directions. More homes are coming to market for the fall, so there is more to look at. But the payment attached to any of them is set by the quote you get this week, not by the Bank's next meeting.

If you are shopping on a pre-approval, check two dates: when the rate hold expires, and what rate it actually holds. Then run the numbers again on today's quote rather than the one you were given when you started looking. Our affordability calculator uses whatever rate you type into it.

What does it change if you are selling?

Your buyer's borrowing power is a little smaller than it was two weeks ago, by whatever their lender has passed through. Prices are flat nationally, listings are up, and the person looking at your home is doing that arithmetic before they write anything. That argues for pricing to the market in front of you, and for taking a firm offer seriously when it arrives. How we handle the sell side starts with the pricing conversation.

What should you do about a renewal?

If your term is up between now and the spring, ask your lender for the current quote in writing, ask how long they will hold it, and then shop it. Nothing in CREA's release or the Bank's data says where rates go next. What is published is that the number on 14 September is higher than the number on 8 September, and a rate hold is the one part of this you control.

Which of fixed or variable suits your situation is a different question, and we have written about what actually decides it.