Toronto’s Fall Real Estate Market: Here’s What People Will Be Talking About!

Are there any psychologists in the house today?

Any therapists?

I have an important question, and it goes something like this:

What is with middle-aged men and their lawns?

Seriously, raise your hand if you were a 9-year-old child, dreaming of using a cordless edge-trimmer one day when you were all grown up.

I never thought I would be that guy.  I guess none of us did.

And yet, here we are, living life in our 30’s, 40’s, or 50’s, and owning a lawnmower, hedge-trimmer, string-trimmer, scores of other lawn-related odds and sods, and about forty pairs of those garden gloves that Home Depot prices at $1.00, forcing you to grab three pairs every single time you walk in the store.

What a weekend, right?

On Saturday, we were supposed to head to the Toronto Zoo with some friends.  They were forced to reschedule, so suddenly I found myself in charge of the kids for a few hours.

So what did Daddy plan?

Well, first we obviously went to Tim Hortons so I could get a coffee, but I was able to sell it to them as an excursion so they could get a cookie.

Then we went to check on the progress at my mother’s new house, which remains under construction, as is every single house that “should” have been finished, but isn’t.

After that, we went to my office so I could pick up a key to our storage locker, which would be our next adventure.  What should have been a quick four-minute pit stop ended up taking a half hour as each child had to use the facilities, one after the next.  The parents know what I mean.

Eventually, we reached our destination: MyStorage on Copleand Street.

What an incredible father I am.  I took my children to a storage locker on the Saturday of a long weekend so they could watch movers take out forty plastic totes that belong to clients of mine.

But that’s not all, folks!

When we got home, I let them sit outside and watch me mow the front lawn!

Twas a glorious sight!

And when I got out the Ryobi edge-trimmer and expertly manicured the space where the lawn meets the driveway, I could feel the angels in Heaven blessing me.

When I was finished, I did what every dad does: I told the children to look at the lawn.

“It’s a lawn, daddy,” my daughter said.

“Yeah, who cares, bro?” my son asked, as a 6-year-old, going on seventeen.

They went inside.  And what did I do, you ask?

I stood outside and stared at my lawn for a solid five minutes.

Admittedly, I even walked out to the curb to look at the lawn from a different angle.

Seriously though, when the $%&#@ did this happen?

It feels like just yesterday that Saturday mornings were spent hungover, sweating profusely in bed, feeling pain all over, and vomiting while regretting the previous night’s transgressions.

Ah, those were the days!  To be young again…

I don’t know what you guys got up to over the long weekend, but here’s hoping that it was enough to tide you over for the next little while.  I know I say this every year at this time, but nothing quite says “summer is over” like the feeling of Tuesday morning after the Labour Day long weekend.  The temperature is colder, the grass has dew, the kids are walking and biking through the neighbourhoods on the way to school, and everybody at your office is feigning a smile.

Oh, that feigned smile.  That classic first-day-after-the-end-of-summer-feigned-smile.

You know the one?  It’s a bit sheepish, definitely contrived, and it’s best described as the one that your receptionist gives you when you walk in on Tuesday morning.

Maybe it’s just me.

What can I say?  I’m a summer-guy.

Canadian winters are harsh, and outside of the December holidays, I find November through February to be really tough in this city.

As I said, maybe it’s just me!

Because while we can all picture that “first-day-after-the-end-of-summer” fake smile, we can also picture that sh!t-eating grin that so many parents display after their kids go back to school!  One member of my team, who shall remain nameless, basically does a dance every September…

So with the boats docked, the golf clubs put away, the kids back in school, and NFL football about to start, what are we doing?

Well, we’re getting ready for what I expect is going to be a very busy fall real estate market.

Sounds cliché, right?  The real estate agent predicting a “busy market ahead” and all.  I mean, weren’t August sales down on a year-over-year basis?  What could I possibly be thinking when I suggest that the fall will be busy?

I suppose I just look at the number of listings we’re bringing out, the number of active buyers we have, the sheer amount of pent-up demand that exists in our universe.

But again, maybe it’s just me.

I haven’t had a summer this busy since 2020, when we were making up for lost time during the height of the pandemic in March, April, May, and June of that year.  It’s been non-stop, and it’s about to get a whole lot busier.

Now, as for what people will be talking about with respect to the Toronto real estate market this fall, I wanted to provide a not-so-brief account of the topics at hand.

As you’ll notice very quickly, many of these topics are merely associated with real estate, rather than being a direct part of the market itself.

But I can’t help what I’m hearing, so please allow me to share…

1) Interest Rates

It feels like 2022 all over again, doesn’t it?

Back when interest rates absolutely dominated the discussions around the real estate market!  All this talk, and all these questions.

“When will rates rise?”

“How much?”

“How quickly?”

This continued into 2023, and when all was said and done, we saw the Bank of Canada policy rate increase from 0.25% in February of 2022 to 5.00% by the summer of 2023.

That’s not to say that we didn’t talk about interest rates into 2024, however.  But the conversation was a lot different then.

We went from, “When will rates go up?” to talking about when the Bank of Canada would start to cut the policy rate.  That came in June of 2024, and a subsequent series of cuts reduced the policy rate to 2.25%, where it sits today.

Those conversations were exhausting, and by the end of 2025, they quieted down.

But once again, talk about the Bank of Canada and monetary policy is ramping up.  The chatter has been consistent all year long.

Personally, I don’t find the conversations to be all that stimulating, but it seems like I’m on the outside looking in on that one.  The newspapers eat this stuff up, and economists simply can’t stop making and revising predictions.

Now, if you want to why I feel the topic of “interest rates” is going to be dominating real estate conversations this fall, it might not be what you think.

It’s not about the effect interest rates have on the market.

It’s not about borrowing power among buyers or affordability in the marketplace.

It’s about the stark contrast between one prediction and the next.  It’s about the dichotomy in the headlines.  It’s about chaos and confusion surrounding any attempt to pinpoint what is happening with interest rates, and why.

In last week’s blog post, I shared this article:

“Bank Of Canada To Hold Rates For Another Year, Wait For More Stability On Trade”
Reuters
August 28th, 2026

That headline doesn’t confuse you though, right?  It’s all pretty clear?

“Hold rates for another year,” the headline reads.

A year is twelve months.  It’s fifty-two weeks.  It’s three hundred sixty-five days.

Here’s an excerpt:

The Bank of Canada will keep its overnight rate at 2.25% on Wednesday and leave it unchanged for at least another year, according to a Reuters poll of economists who have not changed their ​outlook following the suspension in trade talks with the United States.

“At least” another year, the article reads.

Okay then.

So why am I referring to a “dichotomy” in the headlines and “chaos” surrounding interest rate predictions?

Well, maybe becaus this article came out less than one week later:

“Markets Predict Three Bank Of Canada Rate Hikes Are Coming And Some Economists Agree”
Financial Post
September 3rd, 2026

Wait….what?

Didn’t we just say that rates were being held for “at least another year?”

You might point to the fact that this article was published after the Bank of Canada’s rate announcement on September 2nd, but come on – that can’t seriously change the opinion of the entire market overnight, right?

From the article:

Investors have increased their bets the Bank of Canada will hike interest rates in December and beyond, with rates peaking at three per cent, after the central bank on Wednesday announced a seventh consecutive hold at 2.25 per cent.

Bets for a December hike of 25 basis points rose to nearly 90 per cent on Wednesday via the overnight swaps market — used by investors and financial institutions to manage short-term interest rate risks — up from about 60 per cent the day before the rate announcement.

Bets for hikes in 2027 increased, too, with investors going all in on one 25-basis-point hike in January and some betting on as many as three hikes by mid-year.

2) Mortgage Rates

Wait, what?

Didn’t we just cover this point above?

No, we didn’t, as most of you already know.

And some of you – not judging- don’t quite understand the difference between “interest rates” and “mortgage rates,” so apologies to those for whom this is second nature, but a brief explanation is needed.

The Bank of Canada “policy rate,” also called the “overnight lending rate,” or simply known as the “bank rate,” is set by our country’s central bank, which makes policy announcements on nine predetermined dates each year.

Variable-rate mortgages are based solely on the BOC policy rate, which is why so many people obsess about the policy rate as it pertains to their mortgage.

Fixed-rate mortgages are based on the bond market, and some might say they have little to do with the policy rate.

Sure, if the policy rate surges, bond yields would increase.

But there is no obvious and direct correlation between the BOC policy rate and bond rates.

So when I say, “We’re also going to talk about mortgage rates,” after already mentioning that we’re going to talk about interest rates, I am, in fact, talking about two different things.

The discussion point this fall will be the following:

How large does the gap between variable-rate mortgages and fixed-rate mortgages need to grow, in order to have a major impact on borrowing decisions?

The answer to this question can fluctuate in different markets, and it will most certainly differ depending on who you ask, but I think most people would agree that the range is between 75 and 100 basis points.

A quick Google search tells us that we’re on the right track.

From National Bank‘s Market View publication:

When variable rates drop lower than fixed rates by 0.75% or more, consumer preference pivots rapidly.  Market data shows that when this discount widens, the market share for variable-rate mortgages can surge from historical norms of roughly 20% up toward 50% or higher as borrowers chase immediate monthly savings.

A gap reaching a full 1% makes variable products difficult for risk-tolerant or stretched buyers to ignore, heavily outweighing the psychological comfort of a fixed term.

Conversely, when variable rates rise above fixed rates—or when the discount narrows to under 0.25%—borrowing decisions swing aggressively back to fixed-rate terms as consumers prioritize payment certainty with little financial incentive to take on floating-rate risk.

Alright, so the million-dollar question becomes: what is the current spread between variable-rate and fixed-rate mortgages in Canada?

As I write this, the spread is between 65 and 79 basis points, which is a larger gap than we’d like to have as we attempt to answer the question at hand, but there are so many mortgage products out there that it’s hard to pinpoint an exact number.

But regardless of where the gap is today, it seems like it will be larger by tomorrow.

Here’s a headline that will raise some eyebrows:

“Canada’s Fixed Mortgage Rates Surge Higher As Bond Yields Continue To Rise”
Toronto Star
September 3rd, 2026

From the article:

In recent months, the spread has “widened noticeably,” said Jamie David, V-P of mortgages at Ratehub.ca, as the interest rate on a five-year fixed-rate mortgage edges up amid volatility in the bond market.

This bodes well for the “range” I quoted above, but as the headline seems to infer, we’ll be looking at the higher end of the range, and perhaps that range will climb even higher, as this quote from the article tells us:

“There is upward pressure at this moment,” David said, “and fixed rates could go up further in the coming days.”

Exactly!

And why I think that the topic of “mortgage rates” will be a conversation everybody is having this fall, is because borrowers are going to start to panic about whether or not they should move from a variable-rate mortgage to a fixed.

This is like 2019 all over again!

It’s hard for some people to imagine, but back in 2018, I was riding a variable-rate mortgage of about 2.79%, and a friend of mine walked into the office and said, “I just got a five-year, fixed-rate mortgage of 2.74%!”

That makes no sense to you, right?

How could somebody get a fixed rate that’s lower than the prevailing variable?

Well, as we noted above, these rates don’t move in tandem.  One moves according to the Bank of Canada policy rate, and the other moves according to the bond market.  Back then, the bond yields were dropping dramatically as the United States and China were fighting a trade war.  Hmmm….trade war, you say?  We’ll come back to that.

So, imagine a world in which you’re monitoring interest rates every single day, and where you’re worried that your buddy’s fixed rate is blowing your variable rate out of the water.

Yup.  Those times are back upon us.

Not the fixed rate blowing up the variable rate, but rather the worry.

And I’m not the only one suggesting this.  Trust me…

“How Worried Should Variable-Rate Borrowers Be About Bank Of Canada Rate Hikes?”
Financial Post
September 4th, 2026

Ironically, there wasn’t any talk of “worrying” in the article itself.

No quotes from borrowers.  No talk of people switching mortgage products.

The one statistic that I did find interesting, however, was this:

According to August data from Dominion Lending Centres Group, the nation’s largest mortgage originator, over 56 per cent of their prime borrowers picked a variable-rate mortgage.

Hmm…doesn’t sound like there’s all that much worry, is there?

This was in August, mind you.  And the buzz created by the Bank of Canada’s announcement on September 2nd seems to have changed a lot of minds, in a lot of ways.

As an individual who is holding multiple variable-rate mortgages at the moment, I can tell you that I’m not worried.  I’m watching the Bank of Canada and the bond market, but I wouldn’t say that I’m “worried.”

This fall, we’re going to have a lot of conversations about mortgage rates, whether we’re worried or not.

And the reason why we can talk about mortgage rates over and over, without being worried, speaks to a topic that I’m going to cover on Thursday: Consumer Confidence.

We’ll tide it over until then.

Welcome to fall, everybody!