On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%.

If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here’s a plain-language look at what changed, why it happened, and what it could mean for you.

Why the Bank of Canada raised rates

The short answer is inflation. Prices have been climbing faster than the Bank’s 2% target, and it wants to get ahead of the problem before it spreads.

Here’s what’s driving the decision:

• High energy prices. Ongoing conflict in the Middle East has kept oil prices elevated for months. Inflation has been running around 3% since April and is expected to reach about 3.5% by the end of the year.
• Rising business costs. Higher fuel prices make it more expensive to produce and ship goods. Businesses have mostly absorbed those costs so far, but the Bank expects more of them to be passed on to consumers over the next year.
• A stronger economy than expected. Canada’s economy grew faster than forecast through the middle of the year, with solid consumer spending and a rebound in business investment.

By raising rates now, the Bank is trying to keep high energy costs from pushing up the price of everything else.

What this means for you

If you have a variable-rate mortgage

Lenders typically adjust their prime rate to match the Bank of Canada’s moves, and variable mortgage rates are tied to prime. That means your rate will likely go up by about 0.25%.

Depending on your mortgage, you may see a higher monthly payment, or your payment may stay the same while more of it goes to interest instead of principal. It’s worth checking which type you have.

If you have a home equity line of credit (HELOC)

HELOCs are also tied to prime, so the interest on any balance you carry will likely increase.

If you have a fixed-rate mortgage

Your rate and payment won’t change until your term ends. Fixed rates for new mortgages follow the bond market rather than the Bank of Canada directly, and bond yields have already been rising. Fixed rates may stay elevated or move higher in the months ahead.

If your mortgage is up for renewal soon

This is a good time to start planning. Many lenders let you lock in a rate up to 120 days before your renewal date, which can protect you if rates keep climbing. Don’t simply sign the renewal offer your lender sends. Comparing your options could save you money.

If you’re planning to buy a home

Higher rates can affect how much you qualify for. Getting pre-approved now lets you hold a rate for a set period while you shop, giving you a clear budget and some protection against further increases.

What to expect next

The Bank of Canada said further increases are possible, but it plans to move carefully given the uncertainty around energy prices and Canada-US trade.

Its current forecast has inflation averaging about 3% through 2027 before returning to the 2% target by mid-2028. The housing market is expected to remain relatively soft.

The next rate announcement is scheduled for December 9, 2026.

Frequently asked questions

What is the Bank of Canada’s rate now?

As of October 28, 2026, the Bank of Canada’s policy rate is 2.5%, up from 2.25%.

Will my mortgage payment go up?

If you have a variable-rate mortgage or a HELOC, it likely will, or more of your payment will go toward interest. If you have a fixed-rate mortgage, nothing changes until your term ends.

Should I switch from variable to fixed?

It depends on your mortgage terms, any penalties for switching, and how comfortable you are with payment changes. A mortgage professional can run the numbers for your situation.

Will rates keep going up?

The Bank has said more increases are possible but hasn’t committed to them. Much depends on energy prices and how quickly inflation cools.

When is the next rate announcement?

December 9, 2026.

Have questions about your mortgage?

Every situation is different. Whether you’re on a variable rate, coming up for renewal, or getting ready to buy, a quick conversation can help you understand your options and make a plan that fits your goals.

Reach out today to book a no-obligation mortgage review.

This article is for general information only and is not financial advice. Rates and lender policies change often. Speak with a licensed mortgage professional about your specific situation.