The Bank of Canada raised its policy rate to 2.50% last week, and Governor Tiff Macklem told lawmakers he intends to proceed carefully on any further increases. For a buyer with an accepted offer, or about to write one, that single sentence changes what your financing condition needs to do for you.
At $3M and above, the financing condition is not boilerplate. It is the clause that decides whether a rate move between offer and closing is your lender's problem or yours. Too many buyers treat it as a formality their lawyer will "handle." At this price point, that is the mistake that costs the most.
Why the financing condition matters more right now
A quarter point on a $2.5M mortgage is a real monthly number, and a buyer who has not locked a rate by the time they remove conditions is exposed to whatever the market does between now and closing. Macklem's own language, proceeding carefully, is not a promise. It is a hedge. Reuters reported the Bank hiked its key policy rate for the first time in more than three years and flagged another hike is possible.
That is not a reason to panic. It is a reason to build your financing condition so the timeline, not the rate, is what you control.
I covered the broader question of locking versus floating in Macklem Warns Inflation Is Running Hot. This post is narrower: once you have decided your posture on rate, how do you write the condition itself so it protects you.
The order of operations
Here is the sequence I walk clients through before they sign an offer, in order:
- Get pre-approval in writing, with the rate hold documented, not a verbal estimate from a branch call. At $3M+, lenders want full income and asset documentation before they commit, and a soft pre-approval is worth almost nothing once rates are moving.
- Set the financing condition at a minimum of five business days, longer if the property is unusual (a custom build, a non-conforming lot, or anything with acreage). Three days was fine when rates were flat. It is tight now.
- Confirm your lender's rate hold period matches your closing date. Most holds run 90 to 120 days. If your closing is further out than that, you need a plan for what happens at renewal of the hold, not a hope that nothing changes.
- Ask your lender in writing what happens if the appraisal comes in under the purchase price. This is the quiet risk at the luxury end: appraisals can lag fast-moving pricing, and a financing condition that does not address an appraisal shortfall leaves you negotiating from a weak position with days left on the clock.
- Decide, before you waive, whether you are comfortable closing at today's rate or whether you want it locked. Waiving financing is sometimes the right competitive move in a multiple-offer situation, but it should be a decision you make with your lender's confirmation in hand, not a concession you make under pressure at the table.
A real example: the Morrison offer that almost went sideways
A buyer I worked with on a property in Morrison, Oakville had an accepted offer with a standard financing condition, five business days, nothing unusual. Two days in, their lender flagged that the appraisal had come back lower than the purchase price, a gap that is more common right now with prices moving quickly on well-presented homes.
Because the condition had enough runway, we had time to bring the lender a comparable-sales package, including properties I had sold in the area, and the lender adjusted its position before the condition expired. Had that condition been three days instead of five, there would not have been time to resolve it before the deadline, and the buyer would have faced a choice between walking away or closing a financing gap out of pocket on short notice.
That is the whole argument for building room into the clause. It costs you nothing in a clean deal. It saves the deal when something does not line up.
What this means for you
If you are actively house-hunting at $3M+ in this rate environment, your financing condition should do three things: give you enough time to resolve an appraisal surprise, lock in writing what your lender will do if the hold period and your closing date do not line up cleanly, and make sure your pre-approval reflects a lender that has actually underwritten your file, not just quoted you a rate over the phone.
None of that requires you to predict where the Bank of Canada goes next. It requires you to structure the offer so their next move does not become your emergency. I wrote more on reading the central bank's signals as a luxury buyer in Decision Day: How to Read the Bank of Canada as a Luxury Buyer, which pairs well with this if you want the fuller picture on timing your offer around a rate decision.
This week's checklist
- Call your lender and confirm, in writing, your current rate hold expiry date.
- Ask explicitly what their process is if an appraisal comes in under the agreed purchase price.
- Review the length of your financing condition on any offer you are about to write. If it is under five business days on a $3M+ purchase, ask why.
- Confirm your pre-approval is underwritten, not just a quoted estimate.
- If you already waived financing on a current deal, make sure you understand exactly what you are exposed to between now and closing.
What does your current financing condition actually say, and have you confirmed it with your lender since last week's rate move? Jai, with The Agency, Toronto, works with buyers, sellers, and custom-build clients across the GTA and is glad to have a ten-minute conversation about your own situation, offered as a courtesy, never a pitch.