Your renewal letter just got more expensive

The number in your renewal letter changed

Say your renewal letter arrives in November. The rate inside is probably a quarter-percent higher than the one someone got two weeks ago. Not because your lender changed the rules. Because what it costs them to borrow for five years just went up.

Two things moved at once. US inflation came in hotter than expected last week, so the Fed is likely hiking Wednesday. And oil is back around $100 a barrel as the conflict escalates. When those two things happen together, Canadian lenders pay more to borrow, and fixed rates follow.

If you were quoted a rate in August, you might be looking at a quarter-percent more now. Same house, same income, same downpayment. Just a different week.

Oil at a hundred dollars changes the math on everything

When oil spikes, it doesn't stay in the gas tank. It shows up in groceries, freight, heating. Lenders know that, so they price the risk into what they'll lend at today.

The last time crude sat at $100 was early in the US-Iran war. It didn't last. This time, nobody knows. So lenders are assuming it might, and that assumption costs about a quarter of a percent more on a five-year fixed right now.

Variable rates haven't moved yet

Fixed rates climb when lenders' costs climb. Variable rates move when the Bank of Canada moves prime. The Bank doesn't meet again until October 28, so if you have a variable rate or a line of credit, nothing has changed for you this week.

What to watch: oil and what happens Wednesday.

If your renewal lands soon, you have a decision to make

Most lenders will give you an early-renewal quote if you're within a year of your maturity date. That quote usually holds for 30 days. If rates climb further between now and your renewal, you're covered. If they drop, you can walk away and take the lower rate when the time comes.

It's a free look. The only cost is the phone call. And if your renewal letter is sitting on the counter right now, this might be the week to make it.

My take

I still think variable rates have the best shot at saving money over five years. That's not the popular call right now. Lenders are raising fixed rates, oil is spiking, and the headlines all point one direction. But I'm watching two things that could offset each other: oil staying high and feeding inflation, versus the trade war slowing our economy enough that the Bank has to cut again next year. Those two risks have been roughly balanced for weeks. Variable is sitting around 3.55% on the insured side. If the Bank holds or cuts once more before hiking, variable wins. If we get five hikes by late 2027, fixed at 4.24% starts to look smarter. I could be wrong. But I'm not convinced the hike story is as locked in as some think it is.

Insider tip

If your renewal is still a year out and you're already in a fixed rate, call your lender and ask for an early-renewal quote this week. Most will hold it for 30 days. If rates climb, you're covered. If they drop, you walk away and take the lower rate at renewal. It costs nothing to ask.

Go deeper: How a Mortgage Pre-Approval Can Protect You from Rising Rates