The Bank of Canada Raised Rates for the First Time Since 2023 — What It Means for Your Renewal
Written by Daniel Zareh, REALTOR® — licensed since 2006, serving Hamilton, Stoney Creek, Grimsby, Binbrook, Burlington, Oakville and Mississauga.
Written October 28, 2026, the morning of the decision. Rate figures from the Bank of Canada's own release and its October Monetary Policy Report; inflation and employment figures from Statistics Canada. I'm not a mortgage broker — the payment math below is general, and your lender has your actual numbers.
This morning the Bank of Canada raised its policy interest rate by 25 basis points, to 2.50%. The Bank Rate is now 2.75% and the deposit rate 2.45%.
That's the first increase since 2023. For a year the conversation in this market has been about when rates would come down. As of 9:45 this morning, it's a different conversation.
Just so you have the full picture, here's what actually changed, who it hits, and who it doesn't.
What changed, and what didn't
The rate had been sitting at 2.25% since the cut announced on October 29, 2025 — almost exactly a year, through seven straight decisions where the Bank held. Today it moved up a quarter point.
The Bank also published its quarterly Monetary Policy Report alongside the decision, and the line in it that matters most for anyone with a mortgage is this one: inflation "has been higher than anticipated and is projected to remain around 3% through much of 2027."
Read that again, because it's the part people will skip. The Bank isn't saying inflation is about to be fixed. It's telling you its own forecast has prices running near 3% for most of next year. That's not the setup for a quick reversal.
Here's the nuance, though. Canada's headline inflation was 3.1% in September, but strip out gasoline and it was 2.2%. The Bank's own core measures — the ones it watches to see whether price pressure is spreading — were 1.8% on CPI-trim and 1.9% on CPI-median, and both of those eased from August. So this isn't a story about everything getting more expensive. It's mostly energy, and the Bank moved because it doesn't want energy prices leaking into everything else.
Which matters to you, because an energy-driven hike and a broad-inflation hike don't usually have the same ending.
Why energy, and why now
Worth knowing what's actually behind this, because "inflation" on its own doesn't explain much.
Oil has been trading above US$100 a barrel through the autumn, with Brent higher still, on supply disruption out of the Middle East. The Bank's October report says oil prices and refinery margins are elevated and assumes they come down gradually rather than quickly. Energy prices and Canada's trade relationship with the United States are the two risks it flags hardest.
Here's the awkward part, and the Bank knows it: raising rates doesn't produce a barrel of oil. It can't touch what you pay at the pump. What a hike is meant to do is stop high fuel costs from working their way into everything that gets made or moved — groceries, restaurant bills, trades, delivery. The Bank is leaning against the second round, not the first.
That's also why it isn't behaving like a central bank staring at a recession. It now projects growth strengthening to 2% in both 2027 and 2028, and it called this inflation forecast materially higher than the one it published in July. Those two things together are the whole decision.
Where 2.50% actually sits
If the word "hike" put 2022 in your head, it's worth putting a number on the difference.
The Bank publishes its own estimate of the neutral rate — the level that neither stimulates the economy nor holds it back. That estimate is 2.25% to 3.25%. At 2.50%, the policy rate is in the lower half of the Bank's own neutral range. It isn't restrictive. It's barely out of the bottom of normal.
Compare the last cycle. The Bank started 2022 at 0.25%, which is emergency territory, and had to climb to 5.00% by July 2023 to catch up. Headline inflation peaked above 8%. Today it's 3.1%, core is at 1.8% and 1.9%, and the starting point is already most of the way to where the Bank thinks rates belong. There isn't the same distance to travel.
That's not a promise the Bank stops here. It's the reason one quarter point now is a different event than the first quarter point in 2022.
If you're on a variable rate, this is already yours
Variable mortgages and HELOCs are priced off your lender's prime rate, and prime moves with the policy rate. Prime has been 4.45% since the end of October last year. Lenders set their own prime and they almost always match the Bank's move within a day, so expect it at about 4.70% — confirm the number with your lender rather than taking mine.
What that does to you depends on which kind of variable you have, and most people don't know which one they're in:
- Adjustable payment — your payment goes up. You'll see it on your next one.
- Fixed payment variable — your payment doesn't change, which feels like good news and isn't quite. More of each payment goes to interest and less to principal, so your amortization stretches out. If rates kept climbing you could eventually hit your trigger rate, where the payment no longer covers the interest and the lender makes you adjust.
One phone call sorts this out. Ask your lender which type you have, what your payment is as of the next cycle, and if it's fixed-payment, where your trigger rate sits. That's a five-minute conversation and it's worth having this week rather than in February.
If you're renewing in the next few months
This is the group I'd be thinking about hardest.
If your term ends in the next six months, your renewal just got priced in a different environment than the one you've been reading about. And here's the thing a lot of people get wrong: fixed mortgage rates aren't set by the Bank of Canada. They're priced off bond yields. So today's move doesn't automatically push fixed rates up by a quarter point — fixed pricing already had a hike partly baked in, because markets were expecting this.
What that means practically: don't assume your renewal offer is now worse by 0.25%. Find out what it actually is.
Two things I'd do if I were renewing:
Ask for your renewal quote now, not when the letter arrives. Lenders will usually quote you well ahead of maturity and hold it. The renewal letter your bank mails you is an offer, not a rate — and it's very often not their best one.
Shop it. You're allowed to move your mortgage at renewal without a prepayment penalty. That's the one moment in the whole term where you have leverage and it costs you nothing to use it. A broker can tell you in an afternoon whether your bank's offer is competitive.
The honest caveat: switching lenders isn't free of hassle. There's paperwork, sometimes an appraisal, sometimes legal costs the new lender may or may not cover. If the saving is a few basis points it's probably not worth the afternoon. If it's meaningful, it is.
If you're pre-approved and shopping
Check your rate hold date. A pre-approval locks a rate for a set window, and if yours was issued a few months ago it may expire right into a higher-rate market. Ask your lender exactly when it ends and whether they'll re-hold at the old rate.
Your qualifying amount may also shift. For uninsured mortgages, lenders have to qualify you at the greater of your contract rate plus 2% or 5.25% — that's the federal stress test, and it hasn't changed. But if the rate you're being offered moves up, the rate you're tested at moves with it, and your maximum can come down.
Not saying this makes buying a bad idea. It means the number you were working with might not be the number anymore, and it's better to find that out before you write an offer than during one.
If you're on a fixed rate with time left, this isn't your problem
Worth saying plainly, because rate-day coverage makes everyone anxious.
If you're in a fixed term that doesn't mature for a couple of years, nothing that happened this morning changes your payment. Not this month, not next year. You're insulated until renewal, and the Bank has two more years of decisions between now and then.
File it and move on.
What it does to prices around here
Less than the headline will suggest, and not immediately.
A quarter point doesn't reprice a market. What it does is change the mood — and in Hamilton, Burlington and Oakville the mood has been a big part of why buyers have been sitting out. Some of those buyers have been waiting specifically for cheaper money. A hike takes that reason off the table, which cuts both ways: it removes the incentive to keep waiting for some, and it spooks others.
Where I'd push back on the panic: shelter inflation was only 1.8% in September, mortgage interest costs were actually down 0.2% year over year, and rents were up 2.8%. Housing hasn't been what's driving inflation in this country for a while now.
And the other side of it, because it belongs here: the job market is soft. Employment fell 68,000 in September after a 42,000 drop in August, and unemployment sits at 6.5%. That's the strongest argument against a long climb from here, and it's why I'd be careful with anyone telling you this is the start of one.
For the actual local numbers — prices by type and area, days on market, months of supply — my latest market update has the detail and I'd rather point you there than drop a stat block in the middle of a rate post.
The next rate announcement is December 9, 2026. One hike isn't a trend, and the Bank's own report points at energy rather than broad price pressure, which leaves it room. At the end of the day, nobody knows what December brings, and anyone who tells you they do is selling something.
Common Questions
What is the Bank of Canada's policy rate now?
2.50%, after a 25 basis point increase announced October 28, 2026. The Bank Rate is 2.75% and the deposit rate is 2.45%.
Why did the Bank raise rates?
The driver is oil. It's been above US$100 a barrel on Middle East supply disruption, and the Bank's October Monetary Policy Report calls oil prices and refinery margins elevated while naming energy as one of its two key risks. Headline inflation has been running near 3% on gasoline, and the Bank's forecast now has it around 3% through much of 2027. Core measures are still below target — CPI-trim at 1.8% and CPI-median at 1.9% in September — so the move is aimed at stopping energy costs from spreading rather than at broad price pressure.
Is this a repeat of 2022?
No, and the starting point is why. In 2022 the Bank began at 0.25% with headline inflation above 8% and had to climb to 5.00% by July 2023. Today it's at 2.50%, inside its own published neutral range of 2.25% to 3.25%, with core inflation at 1.8% and 1.9%. The cause is different too. 2022 was too much demand, which rate hikes address well. This is an oil supply shock, which they don't.
Will my mortgage payment go up?
If you're on an adjustable-payment variable, yes, on your next payment. If you're on a fixed-payment variable, your payment stays the same but more of it goes to interest. If you're in a fixed term, nothing changes until renewal.
Do fixed mortgage rates go up when the Bank of Canada raises rates?
Not automatically. Fixed rates are priced off bond yields, and markets had largely expected this move, so a lot of it was already reflected in fixed pricing. Get an actual quote instead of assuming.
Should I lock into a fixed rate now?
That depends on your term, your balance, how long you plan to stay and how much payment variability you can live with — it's a mortgage professional's question, not mine, and I'd be wary of anyone who answers it without seeing your file.
When is the next Bank of Canada announcement?
December 9, 2026.
What I'd do this week if your renewal is coming
Send me your renewal date and roughly what you owe, and I'll come back with two things: a straight read on what your place would realistically sell for today if the renewal math pushes you toward moving, and the specific questions to put to your lender so you're comparing their offer against something real.
Where I can't help is the rate itself. I don't quote mortgages and I won't pretend to — that's your lender or a broker, and you should talk to one. What I can do is tell you whether moving actually makes sense once the numbers are in front of you, and plenty of times the answer is that it doesn't.
Call or text 416-276-0052 Email: daniel@zarehhomes.com
Or send me your renewal date and mortgage balance below and I'll put it together.
Keep reading
- Is now actually a good time to buy in Hamilton?
- The latest Hamilton, Grimsby and Stoney Creek market numbers
- The money side of buying: credit, mortgages and what to watch for
- What it actually costs to sell, including the prepayment penalty
Daniel Zareh is a licensed REALTOR® with over 20 years of experience serving Hamilton, Stoney Creek, Grimsby, Binbrook, Beamsville, Burlington, Oakville and Mississauga. Rate and inflation figures were current on October 28, 2026, and the post was updated the same afternoon with detail from the Bank's October Monetary Policy Report. This is general information, not mortgage, financial or tax advice — talk to your lender or a mortgage professional about your own situation.
Want to know what this actually does to your numbers?
Send me your renewal date and roughly what you owe. I'll come back with a straight read on what your place would sell for today if the renewal math pushes you toward moving, plus the specific questions to put to your lender so you're comparing their offer against something real. I don't quote mortgage rates and I won't pretend to — that's your lender's job. What I can tell you is whether moving actually makes sense once the numbers are in front of you.