The Bank hasn't moved in a year. The 5-year bond is up 77 bps

The Bank stood still. The bond did not.

The Bank of Canada cut its policy rate to 2.25% on October 29, 2025. It has held there at every decision since: December, January, March, April, June, July and September. That is seven holds, and the eighth announcement is this Wednesday at 9:45 a.m. Eastern.

If you only watch the Bank, the last year looks like nothing happened. If you watch the bond market, which is where fixed mortgage rates actually get priced, a lot happened. Everything below is through the October 22 close, the latest day the Bank of Canada has published. I am not calling Wednesday.

Three numbers from the Bank's own series

On October 29, 2025, the day of that cut, the 5-year Government of Canada benchmark yield closed at 2.73%. On October 22, 2026 it closed at 3.50%. That is 77 basis points higher with the policy rate unchanged.

The 2-year went from 2.43% to 3.22%, up 79 basis points. Compare it with the overnight rate. A year ago the 2-year sat 18 basis points above 2.25% (2.43 minus 2.25). Today it sits 97 basis points above it (3.22 minus 2.25). The bond market has stopped believing the Bank will stay at 2.25% forever. That is a statement about the market's expectations, not a forecast from me.

What 77 basis points costs on an Ottawa benchmark home

OREB's September benchmark price for Ottawa is $623,500. Put 20% down and you borrow $498,800. I use a 25-year amortization and Canadian semi-annual compounding, and I checked the formula against my August 10 post, where $507,200 at 4.09% came to $2,693 a month. It reproduces that exactly.

The catch is that I do not have a clean lender quote for today. Aggregator rate boards disagree with each other, so I will not pretend one is gospel. Instead I hold the lender spread constant at 65 basis points, the last gap I measured over the 5-year bond in my September 27 post. That puts the cost of money at 3.38% a year ago (2.73 plus 0.65) and 4.15% now (3.50 plus 0.65). The spread is an assumption. The 77 basis point move is not.

On $498,800 that is $2,459 a month then and $2,665 now. The difference is $206 a month, or $2,468 a year. To get the same payment at today's rate you would need a purchase price of about $575,400, which is $48,100 or 7.7% less than the benchmark (the payment ratio, 2,459 divided by 2,665, is 0.923 of the loan).

The cut people are waiting for, scored again

In August I said a quarter-point cut was worth $69 a month. Since August 6, when the 5-year closed at 3.22%, the bond has risen 28 basis points to 3.50%. On the same $498,800 that is about $76 a month, from $2,589 at 3.87% to $2,665 at 4.15%. The bond has already taken back more than the cut would have given you.

It has also come off its highs. The 5-year was 3.69% on September 24, so it is 19 basis points lower today. At a constant 65 basis point spread, a 4.34% rate should now be 4.15%, which saves $52 a month. If your best quote is still near 4.34%, the spread has widened to about 84 basis points (4.34 minus 3.50) and your lender kept the difference. I did not pull a live lender board this morning, so test this yourself with three quotes, not with my number.

What Ottawa did in the same year

September's OREB numbers show a market that has not moved with the cost of money, just away from it. Sales were 1,010, down 6.6% on a year earlier. Active listings were 4,813, up 7.9%. Months of inventory rose to 4.8 from 4.1, and the median days on market went to 27 from 22. The sales to new listings ratio fell to 34.5 from 38.0.

Prices barely cracked. The overall benchmark is down 0.3% on the year. Single family is down 0.1%, townhouses 2.2% and apartments 6.1%. I walked through the inventory side in my October 11 post.

Compare the two moves. Borrowing got 7.7% more expensive in price terms and the benchmark gave back 0.3%. Sellers are mostly absorbing the difference in time and in volume, not in sticker price. I would not claim the bond caused the sales drop. I can say the cost of money rose a lot, and the price did not fall to offset it.

What I would do with this

Buyers: do not plan around Wednesday. Plan around a payment you can carry at 4.15% and again at 4.34%, because the second one is a real number from a month ago. If you are renewing, start shopping now and get at least three written quotes.

Sellers: your buyer's budget did not grow this year, and it just got more sensitive to bond headlines. Price to what a payment supports, not to last spring.

After Wednesday I will pull the 5-year again. If it ends the week more than 15 basis points either side of 3.50%, the decision surprised the bond market. If not, it was already in the price.

I sell houses. I do not arrange mortgages and I do not give tax or legal advice, so rate holds, qualification and terms belong with your broker or lender.

If you want these numbers run on a specific street and a specific payment, call me at 613-262-6545 or write to fil@613realtor.ca. You can also see what is on the market this week and we can work backward from the payment you are comfortable with.