Rates went up for the first time since 2023. Here's the simple version.
On October 28, the Bank of Canada raised its rate by 0.25%, from 2.25% to 2.50%. It's the first increase in over three years, and it ends a long stretch of the Bank holding rates steady.
Whether you're buying your first home, renewing soon or already settled into a mortgage, here's what you need to know.
Why Did the Bank Raise Rates?
In one word: oil.
Oil prices have stayed high for about eight months because of the conflict in the Middle East. That pushes up the cost of fuel and shipping, and businesses are starting to pass those costs on. The Bank of Canada raised rates to stop those higher costs from spreading to everything else we buy.
The Bank now expects inflation to reach about 3.5% by the end of 2026, well above its 2% target. The economy has also held up better than expected, which gave the Bank room to act.
Variable vs. Fixed: One Moved, One Didn't
Variable rates went up. Within hours of the announcement, all of Canada's big banks raised their prime rate from 4.45% to 4.70%. If you have a variable-rate mortgage, a home equity line of credit (HELOC) or a line of credit, it now costs a little more.
Fixed rates didn't change. This surprises a lot of people. Fixed rates aren't set by the Bank of Canada. They follow the bond market.
What's the bond market? It's where the government borrows money from investors. The interest investors want in return is called the bond yield, and banks use it to price fixed mortgages. Bond investors saw this hike coming back in September, so fixed rates had already gone up then. When the announcement came, there was nothing left to adjust.
What Does This Mean for Your Payment?
It depends on the type of mortgage you have. Here's what a 0.25% increase looks like on a $500,000 mortgage:
Mortgage type
What changes
Variable with an adjustable payment
Your payment goes up about $67 a month
Variable with a fixed payment
Your payment stays the same, but about $104 more a month goes to interest instead of paying down your mortgage
Fixed rate
Nothing changes until your renewal
Examples assume a 25-year amortization and are for illustration only.
If you're renewing soon, this is the part to pay attention to. Many people who locked in low rates during the pandemic are renewing over the next year. The Bank of Canada estimates their payments could be about 15% higher.
Even small changes add up. A 0.50% jump on a $600,000 mortgage adds about $170 a month, or over $2,000 a year. A rate hold can protect today's rate for up to 120 days while you decide.
What's Happening in the GTA Housing Market?
It's a good time to be a buyer. In October, home sales across the GTA were down 7.9% from last year, and the average selling price was $1,024,108, down 2.7%. New listings were down too, by 11.9%.
Lower prices have helped offset higher borrowing costs, and buyers have real room to negotiate. There's also a hopeful sign: sales and prices both edged up from September.
What's Next?
The Bank of Canada's next decision is on December 9. It said there "could be a need to increase the policy rate further," but that it will "proceed carefully." Right now, markets see another hike as roughly a coin flip, and economists are split on what comes after.
Nobody can promise where rates go from here. What you can do is make a plan that works no matter which way they move.
What You Can Do Now
Buying? Get pre-approved with a rate hold so today's rate is protected while you shop.
Have a variable mortgage or HELOC? Check whether your payment adjusts or stays the same, and budget for the possibility of another increase.
Renewing in the next year? Start early. Compare your options, not just the rate your bank offers.
Selling? Price your home for today's market, not last year's.
Have questions about your situation? I'd love to help you make your mortgage work for you. Call me at 416-277-4882, email lezah@kingswayfinancial.ca, or apply online to get started.
This post is general information, not personalized mortgage or financial advice. Rates and figures are current as of November 4, 2026 and can change quickly.