Bank of Canada Raises Rate to 2.5% — October 28, 2026

Niki Cuthbert • October 28, 2026

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 is 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. Three factors pushed the Bank to act:

  • 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. Imported industrial and electronics prices have also increased. The Bank is concerned these costs will eventually be passed on to consumers.
  • A stronger economy than expected. Canada's economy grew 3.3% in the second quarter — faster than forecast. Consumer spending has been solid and business investment has picked up. A stronger economy can fuel more inflation, which the Bank wants to get ahead of.

What This Means for You

Here is how the rate increase could affect you depending on your situation:

  • Variable-rate mortgage: Your rate will go up by approximately 0.25%. Depending on your mortgage structure, your payment may increase or more of your payment will go toward interest rather than principal.
  • Home equity line of credit (HELOC): The interest on your outstanding balance will increase. If you carry a balance, expect slightly higher monthly costs.
  • Fixed-rate mortgage: No immediate change. Your rate is locked in until your term ends. However, fixed rates in the market may stay elevated, which matters when you renew.
  • Renewal coming up: Now is the time to start planning. You can typically lock in a rate up to 120 days before your renewal date. Talk to a mortgage professional to explore your options early.
  • Planning to buy: Higher rates affect how much you qualify for. Getting pre-approved sooner rather than later gives you a clear picture of your budget before rates potentially move again.

What to Expect Next

The Bank of Canada was clear that further increases are possible, but said it will proceed carefully given the uncertainty in the economy — particularly around trade and energy prices. Here is the outlook they shared:

  • Inflation is expected to average around 3% through 2027 before coming back to 2% by mid-2028.
  • The Canadian economy is expected to grow about 1% in 2026 and 2% in 2027 and 2028.
  • The next rate announcement is December 9, 2026 .

There is still considerable uncertainty, especially around Canada-US trade relations and how long energy prices stay high.

Frequently Asked Questions

What is the Bank of Canada rate now?
As of October 28, 2026, the overnight rate is 2.5%.

Will my mortgage payment go up?
If you have a variable-rate mortgage or HELOC, yes — you will likely see a small increase. If you have a fixed-rate mortgage, your payment stays the same until your term ends.

Should I switch from variable to fixed?
It depends on your current rate, the penalty for breaking your mortgage, and where fixed rates are today. This is worth discussing with your mortgage broker before making a move.

Will rates keep going up?
Possibly. The Bank has not committed to more increases, but has not ruled them out. The next decision is December 9, 2026.

When is the next Bank of Canada announcement?
December 9, 2026.

Have questions about how this affects your mortgage? Reach out to book a no-obligation mortgage review — we are happy to walk you through your options.

This post is for general information purposes only and does not constitute financial or mortgage advice. Always speak with a licensed mortgage professional about your specific situation.

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What You Need to Know About Mortgages and Parental Leave

By Niki Cuthbert • October 21, 2026
If the title of this article caught your attention, chances are your family is growing. Congratulations. If you’re thinking now is the right time to move into a home that better fits your growing family—but you’re unsure how parental leave affects your ability to qualify for a mortgage—you’re in the right place. Here’s the good news. Qualifying for a mortgage while on parental leave is possible when it’s done correctly. When you work with an independent mortgage professional, lenders can often qualify you based on your return-to-work income , as long as you can provide documentation confirming you have guaranteed employment waiting for you. A word of caution If you walk into a bank branch and disclose that you’re currently on parental leave, there’s a chance the bank will only allow you to qualify using your parental leave income. That can significantly reduce your borrowing power. Parental leave income is typically limited to 55% of your previous earnings, up to a weekly maximum. Qualifying on that amount alone can restrict your options and impact the type of home you can purchase. Why lender choice matters One of the biggest advantages of working with an independent mortgage professional is choice . You’re not limited to one lender’s rules or products. Some lenders will allow you to qualify using 100% of your confirmed return-to-work income , which can make a meaningful difference in your approval amount and overall options. What you’ll need to qualify Most lenders will require an employment letter that includes: Employer name (preferably on company letterhead) Your job title Original start date (to confirm probation has been completed) Confirmed return-to-work date Guaranteed salary upon return Lenders want reassurance that your income will resume once parental leave ends. You may also be asked to provide income history from the past couple of years, which is standard for most mortgage applications. One important note Whether or not you actually return to work after parental leave is entirely your decision. From a mortgage perspective, qualification is based on having a confirmed position available to you at the time of approval. If you have questions about qualifying for a mortgage while on parental leave—or anything mortgage-related—please connect anytime. I’d be happy to walk you through your options and help you plan with confidence.

Need Funds Between Buying and Selling? Here’s How Deposit Loans & Bridge Financing Help

By Niki Cuthbert • October 14, 2026
You’ve outgrown your current home. It no longer fits your life, so moving makes sense. And you’re not interested in juggling two properties. Selling first and buying something new feels like the right move. Ideally, you want possession of the new home before leaving the old one. That overlap makes moving easier, reduces stress, and gives you time to paint, renovate, or settle in before the boxes arrive. But there’s a common challenge. What if the down payment for your next home is tied up in the equity of the one you’re selling? That’s where bridge financing comes in. How bridge financing works Bridge financing temporarily unlocks equity from your current home once it has a firm sale . It bridges the gap between selling your existing property and purchasing your next one, allowing you to use that equity toward your down payment. What about competitive markets? In a hot market, a strong offer often means a larger deposit . If you don’t have that cash sitting in your account, but you do have equity, a deposit loan can help you compete with confidence. The non-negotiable requirement To qualify for bridge financing or a deposit loan, your current home must have a firm, unconditional sale . No firm sale = no bridge or deposit loan. Lenders need certainty to calculate available equity and manage risk. Bottom line A firm sale is the key that unlocks bridge financing and deposit loans. If you’re planning a move and want to understand how these options could work for you, let’s talk. I’m always happy to walk you through your options and help you plan your next step with confidence.