Q2 GDP Posts Fastest Growth in 3 Years — So Why Aren't Mortgage Rates Falling?

Published Wednesday, October 21, 2026 · Rates, market figures and outlooks in this article reflect its publication date and may differ today. Ask us for the latest picture. Translated from the Korean original.

Canada's real GDP grew 0.8% quarter over quarter (3.3% annualized) in the second quarter, the fastest pace in more than three years. Even so, mortgage rates did not come down. That's because the bond yields that drive fixed rates actually rose, due to a global bond sell-off and trade uncertainty.

Key Points

• Q2 GDP grew 3.3% annualized, above the Bank of Canada's forecast (about 2.5%)
• 17 of 20 industries grew; final domestic demand rose 3.9% annualized
• Exports up 3.6% (shipments of passenger cars and light trucks jumped 27%), though largely a one-time rebound
• Business investment up 2.3%, ending five straight quarters of decline
• Q1 growth revised up from -0.1% to +0.3% (annualized), avoiding a technical recession
• July GDP flat; August advance estimate +0.2% (official figure to be released October 30)
• 5-year bond yield hit a 52-week high of about 3.73% on September 28; big banks raised fixed rates by 0.1–0.2 percentage points
• Based on advertised rates: 5-year fixed 4.59%, 5-year variable 3.41%

What It Means

Strong growth did not translate directly into higher rates. Variable rates are tied to the BoC policy rate (2.25%, on hold), and fixed rates to bond yields, and the recent rise in fixed rates was driven more by global bond market trends than by growth. That said, Q2 growth owed a lot to one-time export factors, and judging by the July–August data and the recent slowdown in hiring, growth is likely to slow noticeably from Q3 onward. From a mortgage perspective, rather than waiting for rates to fall, a realistic approach is to check rates 4–6 months before your renewal date and secure a rate hold. The October 28 BoC decision and the October 30 release of August GDP are the variables to watch for the future direction of rates.