Bank of Canada raises its rate to 2.5%

On October 28, 2026, the Bank of Canada raised its policy rate by 0.25 percentage points, to 2.5%. The Bank said inflation has been running higher than it expected, and it expects “housing to remain relatively weak”. It also said “there could be a need to increase the policy rate further”.

It’s the Bank’s first rate increase since July 2023.

Who it affects

• Variable-rate mortgages and home equity lines of credit follow the banks’ prime rate, which usually moves with the Bank of Canada. Expect your lender to tell you about a change within days.
• Fixed-rate mortgages don’t change if you already have one. New fixed rates follow the bond market, which often moves before the Bank does.
• Buyers shopping now: a higher rate can lower the amount you qualify for. If your pre-approval is more than a few weeks old, ask your lender or broker to check it again.
• Sellers: fewer buyers can afford the same price, which adds to the pressure already showing in the September numbers.

Dates to watch

• November 5, 2026: the federal budget.
• December 9, 2026: the Bank of Canada’s next rate decision.
• January 1, 2027: the federal ban on non-Canadians buying residential property is currently set to end. It has been extended before. If this affects you, check its status before you make an offer.

What to do now

If you have a variable-rate mortgage, look at how much your payment would rise and whether it still fits your budget. If you’re buying, update your pre-approval before you start viewing homes, so you know exactly where you stand. I’m happy to walk through the numbers with you.

This article is general information, not legal, tax or financial advice.