Update, October 28, 2026: the Bank of Canada raised its policy rate from 2.25% to 2.5%, its first increase since July 2023. Variable rates tied to the banks' prime rate usually follow the policy rate; the fixed rates and offers quoted below date from the survey indicated. What the increase means for you.
News · Bank of Canada · October 28, 2026
The policy rate goes from 2.25% to 2.5%. How much more on your payment, how much less to qualify, and what it changes for buying, selling or renewing.
On October 28, 2026, the Bank of Canada raised its policy rate from 2.25% to 2.5%, its first increase since July 2023. On a $400,000 variable mortgage amortized over 25 years, that is about $55 more per month; fixed-rate mortgages do not move until renewal.
The short answer
On October 28, 2026, the Bank of Canada raised its policy rate by a quarter point, from 2.25% to 2.5%. It is its first increase since July 2023, after seven straight holds at 2.25%. On a $400,000 variable-rate mortgage amortized over 25 years, a quarter point more is about $55 more per month. Existing fixed-rate mortgages do not move until renewal.
Why the Bank of Canada raised its rate
Inflation came in higher than expected. The Bank mainly points to energy prices, high for a long time, and new US tariffs, according to Le Devoir and Le Soleil. In its Monetary Policy Report released the same day, it expects inflation around 3% for most of 2027 and a return close to 2% around mid-2028 (Bank of Canada).
What it changes on your payment
| Loan | Payment at 4.16% | Payment at 4.41% | Per month | Per year |
|---|---|---|---|---|
| $300,000 | $1,604 | $1,645 | +$41 | +$495 |
| $400,000 | $2,139 | $2,194 | +$55 | +$660 |
| $500,000 | $2,674 | $2,742 | +$69 | +$825 |
Assumption: a 4.16% variable rate, the average we surveyed in September 2026, rising by the same quarter point as the policy rate. The banks' prime rate, which drives variable mortgages, usually follows the policy rate; it was 4.45% before the announcement. Your lender confirms your new rate.
If your variable mortgage has fixed payments, your payment does not change, but a larger share goes to interest: on $400,000, first-month interest goes from about $1,375 to $1,457, or $82 less toward principal each month. If your rate is fixed, nothing changes before renewal; fixed rates mostly follow 5-year bond yields, not the policy rate directly. See fixed or variable: the math.
What it changes for qualifying
The stress test uses the higher of 5.25% or the contract rate plus 2 points. For a variable-rate borrower, the qualifying rate goes from 6.16% to 6.41%. On $400,000, the qualifying payment rises from $2,597 to $2,658; with the same income, you qualify for about $391,000 instead of $400,000, or about $9,000 less. For a fixed-rate borrower at 4.09%, the best insured rate surveyed in September, the qualifying rate stays at 6.09% as long as fixed rates do not move.
If you are buying
The market did not wait for the increase to slow down. In our study of 52 cities by quarter, January-to-September 2026 sales are down in 35 of 52 cities, and houses sell more slowly in Q3 in 35. More choice, more time to negotiate. The protection against a next increase is a pre-approval with a guaranteed rate: the rate is held for several months, depending on the lender, and you benefit if rates drop.
If you are selling
A variable-rate buyer qualifies for a little less than yesterday, about 2% less in our example. It does not change the price of a well-priced house, but it punishes an overly ambitious price more: the property sits, and that is when price cuts come.
If you are renewing
A 2026 or 2027 renewal is negotiable: compare offers from several lenders rather than signing the first letter you receive. See mortgage renewal 2026-2027 in Quebec.
What about your city?
One page per city, with the median house of Q3 2026.
Frequently asked questions
Will the policy rate keep rising?
Nobody knows. The Bank of Canada decides at each announcement, and the next one is in December. For the big banks' scenarios, see the Bank of Canada rate forecast for 2027.
Did my variable payment go up today?
If your lender raises its prime rate, your variable rate rises by the same amount. With variable payments, your payment goes up; with fixed payments, the interest share goes up. Your lender will notify you.
Is it still a good time to buy?
The market is slower than in 2025 in most of the cities we track: more choice and more room to negotiate. With a guaranteed-rate pre-approval, you buy with a rate on hold.
Sources: Bank of Canada, policy rate announcement and Monetary Policy Report of October 28, 2026; Le Devoir and Le Soleil of October 28, 2026; Loaa & Manseur team calculations (25-year amortization, interest compounded semi-annually). This is not personalized financial advice.
Also available in French: version française de ce guide.
Published September 7, 2026 by the Loaa & Manseur team, the number 1 team at RE/MAX Platine in 2024 and 2025, 6th RE/MAX team in Quebec, 15th in Canada and in the global top 50 according to the official RE/MAX ranking. Tell us about your project.