Quick answer: The Bank of Canada raised its policy rate by a quarter point to 2.5% on October 28, 2026. Variable rate payments and lines of credit went up right away. Fixed rates did not jump because they follow bond yields, but they are unlikely to fall soon. If you renew or buy in the next year, now is the time to plan.
I have spoken with a lot of clients since the announcement. Most of them asked the same thing: "What does this mean for me?" This article answers that in plain language, using the numbers available as of November 4, 2026.
What did the Bank of Canada announce on October 28, 2026?
The Bank of Canada raised its target for the overnight rate from 2.25% to 2.5%. It was the first increase since July 2023, after a long run of cuts and holds. The Bank Rate is now 2.75% and the deposit rate is 2.45%.
The Bank also said there could be a need to raise the rate further, but that it would proceed carefully because the outlook is uncertain.
Why did the Bank of Canada raise rates now?
The short answer is energy prices. Oil has stayed high because of the conflict in the Middle East, and gasoline prices were up 27.8% from a year earlier in September. Headline inflation was 3.1% in September, and the Bank expects it to reach about 3.5% by the end of the year.
Inflation without gasoline was 2.2%, so the Bank is not reacting to runaway prices everywhere. It raised rates to stop high energy costs from spreading into the price of everything else.
- Inflation: 3.1% in September 2026, expected to average about 3% in 2027.
- Jobs: unemployment has held near 6.5% for several months.
- Growth: the Bank expects growth of about 1% in 2026, slowing late in the year because of new US tariffs.
- Housing: the Bank expects housing to stay relatively weak.
How does the rate hike change a variable rate mortgage payment?
If your variable rate payment adjusts with prime, it went up within days of the announcement. On a $500,000 mortgage with 25 years left, a quarter point increase adds roughly $67 a month. On $600,000 it adds about $80 a month.
Many big bank variable mortgages keep the payment the same and change how much of it goes to interest instead. Your payment may look unchanged, but you are paying the balance down more slowly. If you are not sure which type you have, check your last statement or ask us to review it.
Does the rate hike affect fixed mortgage rates?
Not directly. Fixed rates follow Government of Canada bond yields, not the Bank of Canada rate. The five year bond yield was about 3.5% in early November 2026, and the best insured five year fixed rates advertised in Canada were around 4.4%.
Bond markets had already priced in some of this hike, so fixed rates did not spike on the day. They are, however, unlikely to drop while inflation stays near 3%. You can see what lenders are offering on our current rates page, and the guide to how fixed rates are set explains the link to bonds.
What should you do if your mortgage renews in the next year?
Start early. Most lenders let you lock in a renewal rate 120 days before your maturity date, and some allow more. Holding a rate early protects you if rates rise again, and you can still take a lower rate if one appears before you close.
- Find your maturity date and current balance on your latest statement.
- Get your lender's renewal offer in writing, and do not sign it straight away.
- Compare it with other lenders. Since November 2024, switching lenders at renewal without adding to your balance does not require a new stress test.
- Run the numbers with our renewal payment guide and mortgage calculators.
Should buyers in Surrey and the Fraser Valley wait or act?
A higher rate makes borrowing a little more expensive, but the local market is giving buyers room to negotiate. In October 2026 the Fraser Valley benchmark price was $860,000, down 6.4% from a year earlier, and the board described it as a buyer's market. Metro Vancouver's benchmark was $1,068,600, down 5.2% over the same period.
If you are planning to buy, get a pre approval now. It holds a rate for 90 to 120 days and tells you exactly what you can afford at today's rates. Our Surrey pre approval guide walks through the steps.
When is the next Bank of Canada decision?
The next scheduled announcement is December 9, 2026. The next inflation report, covering October, comes out on November 16, 2026. Both will shape where variable rates go next.
What are the key takeaways?
- The Bank of Canada raised its rate to 2.5% on October 28, 2026, its first increase since 2023.
- Variable rate payments rose by about $67 a month for every $500,000 borrowed.
- Fixed rates follow bond yields and sit around 4.4% for the best insured five year terms.
- If you renew or buy in the next year, hold a rate early and compare offers.
If you want to know exactly how this affects your mortgage, book an appointment or call me at 604 591 3590. It takes about fifteen minutes to run your numbers.
What other questions do readers ask?
Will the Bank of Canada raise rates again?
The Bank said on October 28, 2026 that there could be a need to raise the policy rate further, but that it will move carefully. Some bank economists expect one more quarter point increase early in 2027. Nobody knows for sure, so plan your budget with some room for higher payments.
How much did prime rate go up?
The big banks moved their prime rates up by a quarter point, the same amount as the Bank of Canada increase. Any variable rate mortgage or line of credit tied to prime now costs about 0.25% more.
Can I switch my variable mortgage to a fixed rate?
Most lenders let you lock a variable mortgage into a fixed term at any time without a penalty, usually into a term at least as long as the time left on your current one. Ask your lender or broker which fixed rate they would offer before you decide.
Does the rate hike change my pre approval?
A pre approval usually holds a rate for 90 to 120 days. If yours was issued before October 28, the held rate still applies until it expires. If you are not pre approved yet, the new qualifying numbers may lower your budget slightly.
Where do these numbers come from?
- Bank of Canada policy rate decision, October 28, 2026 (full text)
- TD Economics: Bank of Canada interest rate announcement
- Ratehub: best five year fixed mortgage rates
- Greater Vancouver Realtors monthly market reports
- Fraser Valley Real Estate Board market statistics (October 2026)
Published November 4, 2026. This article is general information, not personal financial advice. Rates and programs change, and every approval depends on your full application. Asim Ali is a licensed mortgage broker with Dominion Lending Centres A.I.M.I. Collective Mortgage Group.