Remember October 8? I asked a simple question: could your mortgage payment go UP on October 28?
Today, the Bank of Canada answered: yes.
The Bank raised its policy rate by 0.25%, to 2.50%. That's its first hike since July 2023. The reason, in plain terms, is that inflation is running near 3% and the Bank doesn't want higher fuel costs spreading through everything else.
The Bank now expects inflation to rise to about 3.5% by year-end and average 3% in 2027, before coming back to 2% around mid-2028. Core inflation measures, which strip out volatile items, remain close to 2%.
What it means in real dollars
This is where it stops being a headline and starts being a payment.
And this is no longer an assumption: all six big banks (BMO, Scotiabank, National Bank, TD, RBC, CIBC) have announced prime rising from 4.45% to 4.70%, effective October 29, 2026.
| Mortgage balance | Payment before | Payment after | Change per month |
|---|---|---|---|
| $500,000 | $2,644 | $2,712 | about +$68 |
| $750,000 | $3,966 | $4,068 | about +$103 |
Calculation basis: prime minus 0.40% (4.05% before, 4.30% after), 25-year amortization, semi-annual compounding. With monthly compounding, which many variable products use, the increase is about $70 on $500K and $105 on $750K. Illustrative only, OAC. Your lender's discount, amortization and compounding change the exact number.
Why this hike surprised so many people
Honestly, this decision whipsawed everyone, including the markets.
Just weeks ago, after a weak September jobs report (68,000 jobs lost, unemployment up to 6.5%), markets were pricing only about a 30% chance of an October hike. Then September CPI printed 3.1%, driven almost entirely by gasoline (inflation excluding gasoline was 2.2%). Governor Macklem warned that the risk of inflation broadening "has gone up," and economists' calls flipped to hike within days. By the week of the decision, markets put the odds of a hike at roughly three in four.
That whipsaw is exactly why the fixed-versus-variable decision feels impossible right now. Nobody had a steady read on this one. Not the markets, not the economists, not the banks.
What happens next
The Bank left the door open but didn't commit. Its line: "There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully." The next scheduled decision is December 9, 2026.
Who feels this hike, and who doesn't
- Adjustable-rate mortgage (ARM) borrowers: the rate goes up and so does the payment, starting with prime's move on October 29. This is where the $68-per-$500K figure lands directly.
- HELOC and other prime-based borrowers: interest costs rise right away too.
- Fixed-payment variable borrowers: the rate rises as well, but the payment doesn't change. Instead, more of each payment now goes to interest and less to principal. Know your trigger rate. That's the number that matters.
- Fixed-rate holders: feel nothing until renewal. And renewals are the big story underneath all of this: CMHC estimates roughly 1.15 million mortgages renew in 2026 and another 940,000 or so in 2027.
The reassuring part
One hike doesn't rewrite your whole plan. What matters is your setup: your rate type, your trigger rate, and how much room you have before renewal. Check your statement and you'll know exactly where you stand.
If you want your exact number worked out, send me your balance and rate and I'll run it for you.
Next Bank of Canada rate announcement: Dec 9, 2026.