Your Next Move: Let’s Find the Mortgage Plan That Fits You
A rate announcement can leave you wondering whether your payment will change—or whether you should put your homebuying plans on hold.
On October 28, 2026, the Bank of Canada increased its overnight policy rate by 0.25 percentage points, from 2.25% to 2.50%. The impact on your household depends on your mortgage type, lender and plans.
In this update:
- Why the Bank increased its rate
- What economists and mortgage-industry voices expect next
- How different mortgages are affected
- A weekly payment example
- What buyers and homeowners can do now
Why did the Bank increase its rate?
The Bank is concerned that persistently high energy costs will spread into the prices of other goods and services. It expects inflation to average approximately 3% in 2027 before returning to 2% around mid-2028.
It also sees stronger growth than previously projected, although trade uncertainty remains a risk. Its message: further increases may be necessary, but it will proceed carefully.
The next scheduled decision is December 9, 2026.
Source: Bank of Canada announcement.
What are economists and industry voices predicting?
There is no single agreed path ahead. Here is a comparison of published views leading into today’s decision, rather than post-announcement reactions.
| Organization | Published outlook | What it means for planning |
|---|---|---|
| RBC Economics, week of October 26 | Expected an October increase, with low conviction about timing. Its existing outlook assumed 100 basis points of increases during 2027, conditional on economic improvement. | Consider whether your budget could manage several increases, without treating that forecast as a certainty. |
| Desjardins, October outlook | Expected an October increase followed by another in January 2027. | Today’s increase may not be the last. |
| TD Economics, October 23 | Considered an increase premature, citing a softer labour market and trade risks. | There are reasons the Bank could move more slowly than some forecasts suggest. |
| Dominion Lending Centres’ chief economist Sherry Cooper, reported October 19 | Expected an October hold, while acknowledging tightening could be needed if inflation broadened and persisted. | Even experienced forecasters can differ on the timing. |
Sources: RBC Economics, Desjardins, TD Economics, and Canadian Mortgage Professional.
From the mortgage industry, Ratehub.ca’s Clay Jarvis also highlighted the importance of bond yields for fixed mortgage pricing and suggested arranging a rate hold during uncertain conditions. That can provide protection while you assess a purchase or renewal, subject to the lender’s conditions.
Source: MoneySense’s October 22 mortgage outlook.
My takeaway: build a mortgage plan that works under more than one rate scenario. A forecast can inform your decision, but your household should not need it to be exactly right.
Will your mortgage payment change?
Variable rate with adjustable payments: Your payment generally changes when your lender changes the applicable prime rate. Confirm the amount and effective date with your lender.
Variable rate with fixed payments: Your regular payment may initially stay the same, but more can go toward interest and less toward principal. Contract provisions may eventually require an adjustment.
Existing fixed-rate mortgage: Today’s announcement does not change your contracted mortgage rate during its term.
Shopping for a new fixed rate or renewing: Fixed mortgage pricing is influenced by bond yields and lenders’ funding costs. It does not automatically move by the same amount as the Bank’s policy rate.
Sources: Financial Consumer Agency of Canada and TD’s explanation of fixed mortgage pricing.
Case study: What a rate increase could add to your weekly expenses
The last Bank of Canada rate decrease was October 29, 2025, when the policy rate fell to 2.25%. Today’s increase moves the policy rate back to 2.50%.
Sources: October 2025 announcement and October 2026 announcement.
To put a payment increase into perspective, consider an illustrative scenario in which a homeowner’s weekly payment rises from $715.65 to $736.32:
| Payment comparison | Amount |
|---|---|
| Weekly payment before the increase | $715.65 |
| Illustrative weekly payment after the increase | $736.32 |
| Additional weekly expense | $20.67 |
| Additional expense over 52 weekly payments | $1,074.84 |
| Average additional monthly expense | $89.57 |
$736.32 − $715.65 = $20.67 more per week. Over 52 payments, that adds up to $1,074.84 in additional mortgage payments if the payment stays unchanged.
That is more than $1,000 a year that needs to come from the household budget. For a family already balancing groceries, utilities and other commitments, even a modest payment increase deserves a plan.
These figures illustrate the budget impact of a payment increase; they are not a lender quote or a calculation of today’s rate change on a specified mortgage. A previous payment decrease will not necessarily reverse by exactly the same amount. The actual adjustment depends on the outstanding balance, remaining amortization, mortgage terms and lender calculation. The additional payment is a cash-flow expense; it is not necessarily all additional interest.
Is now still a good time to purchase?
Yes—now can still be a good time to purchase when the home and the financing fit your circumstances.
If you’re buying your first home, explore condo opportunities for first-time home buyers and consider how mortgage payments and condo fees fit your budget
A rate increase is a reason to review the numbers. It does not, by itself, determine whether buying makes sense.
Before making an offer:
- Set a comfortable payment limit. Include property taxes, utilities, insurance, maintenance and any condo fees.
- Compare mortgage options. Consider payment stability, flexibility, prepayment privileges and potential penalties alongside the rate.
- Check a higher-payment scenario. Understand what another increase could mean before committing.
- Ask about a rate hold. Confirm its expiry date, conditions and whether a lower rate can be accessed before closing.
- Keep a cash cushion. Closing costs and unexpected expenses need room in the plan.
For homeowners approaching renewal, an early review gives you time to compare options. For variable-rate borrowers, the first step is confirming how your own contract responds to prime-rate changes.
Mortgage terms in plain language
- Policy rate: The Bank of Canada’s target overnight interest rate.
- Basis point: One-hundredth of a percentage point; 25 basis points equals 0.25 percentage points.
- Prime rate: A lender’s reference rate used to price many variable-rate products.
- Fixed-rate mortgage: A mortgage with an interest rate set for its term.
- Variable-rate mortgage: A mortgage whose interest rate can change during its term.
- Amortization: The repayment period used to calculate mortgage payments.
- Rate hold: A lender’s conditional commitment to a rate for a specified period.
- Renewal: The arrangement of a new mortgage term when the current one ends.
Frequently asked questions
[FAQ] Did the Bank of Canada increase rates on October 28, 2026?
Yes. It raised its policy rate from 2.25% to 2.50%.
[FAQ] Was the last rate decrease in November 2025?
The announcement was October 29, 2025. Some borrowers may have seen their payment adjustment afterward.
[FAQ] Will everyone’s mortgage payment increase?
No. The effect depends on the mortgage type and contract. Existing fixed mortgage rates remain unchanged during their term.
[FAQ] Are more increases guaranteed?
No. The Bank has left that possibility open, and economists disagree about the path ahead.
[FAQ] Should I wait for lower rates before buying?
That decision should reflect your budget, housing needs and financial cushion. Lower future rates are not guaranteed.
Let’s look at what this means for you
Have questions about today’s announcement, your mortgage or your plans to buy? Reach out to me, Tracey Brock. Now can still be a good time to purchase, and I can help you understand your options and build a plan that fits your budget.
Editorial link intents for publication:
- “Fixed versus variable mortgages” → a related educational article.
- “Preparing for your mortgage renewal” → a renewal planning article.
- “Understanding mortgage pre-approvals” → a purchase planning article.
Research note: Forecasts above were published before the October 28 decision. They are not presented as updated reactions to the announcement.
