On October 28, 2026, the Bank of Canada raised its policy rate by 0.25%, from 2.25% to 2.5%. It’s the first increase since July 2023, and the Bank said it may need to raise rates again. Here’s what it means for you, depending on what kind of mortgage you have or are shopping for.
Why the Bank raised rates
The Bank said inflation is running higher and lasting longer than it expected, largely because of high oil prices linked to the conflict in the Middle East. It’s worried those costs will spread to other prices. The economy has also been stronger than forecast, giving the Bank more room to act.
The Bank said it will take future decisions “one meeting at a time.” The next decision is December 9, 2026.
What changes, and for whom
| Your situation | What happens |
|---|---|
| Variable rate, payment adjusts | Your rate and payment go up, usually within a payment cycle or two |
| Variable rate, fixed payment | Your payment stays the same, but more of it goes to interest and less to your balance |
| Fixed rate | Nothing changes until your term ends |
| HELOC or line of credit | Your rate goes up, usually right away |
| Shopping or renewing soon | Variable rates are higher. Fixed rates were already rising because of bond yields. |
Canada’s big banks raised their prime rate from 4.45% to 4.70%, effective October 29. Variable mortgages and HELOCs are priced from prime.
What a 0.25% increase costs
For an adjustable-rate variable mortgage with 25 years left:
| Mortgage balance | Monthly increase | Yearly increase |
|---|---|---|
| $400,000 | About $55 | About $665 |
| $500,000 | About $69 | About $830 |
If your variable mortgage has a fixed payment, your payment won’t change, but on a $500,000 balance about $104 more a month now goes to interest instead of paying down your mortgage.
Your exact numbers depend on your rate, balance and amortization.
What about fixed rates?
Fixed rates follow the bond market, not the Bank of Canada directly. Canada’s 5-year bond yield climbed from about 2.6% in late February to more than 3.6% by early October, and lenders have been raising fixed rates through the fall. Some 5-year fixed specials at the big banks are already above 5%.
What to do now
- Variable, adjustable payment: Check that your budget can handle further increases. Ask whether locking in makes sense for you.
- Variable, fixed payment: Ask your lender how close you are to your trigger rate.
- Renewing in the next four months: Get a rate hold now. If rates fall, you can usually still take the lower rate.
- Buying soon: Get pre-approved to lock in a rate for up to 120 days while you shop.
- Carrying a HELOC balance: Consider paying it down or moving it into a fixed-rate portion if your lender allows.
Not sure which applies to you? I’m happy to look at your mortgage and walk you through your options. Read more in my fixed or variable guide.
Frequently asked questions
What did the Bank of Canada do in October 2026?
On October 28, 2026, the Bank of Canada raised its policy interest rate by 0.25% to 2.5%. It was the first increase since July 2023.
What is the prime rate in Canada now?
Canada’s major banks raised their prime rate to 4.70%, effective October 29, 2026, up from 4.45%.
Will my mortgage payment go up after the rate hike?
It depends on your mortgage. Adjustable-rate variable payments go up, fixed-payment variable mortgages put more of each payment toward interest, and fixed-rate mortgages don’t change until renewal.
Will the Bank of Canada raise rates again?
The Bank said it may need to raise rates further and will decide one meeting at a time. Its next scheduled decision is December 9, 2026.
Should I get a rate hold now?
If you’re buying or renewing in the next few months, a rate hold can protect you if rates keep rising. Most lenders hold a rate for up to 120 days, and many will give you a lower rate if rates drop.
Next step
Every situation is a little different. If you’d like to talk through yours, book a consultation or read more about my renewal and switch service.
This guide is general information, not financial or legal advice. Rules, programs and rates change, so please confirm current details with me or the official sources linked above.