Quick answer: On October 28, 2026 the Bank of Canada raised its policy rate by 0.25 points to 2.50%, the first increase since July 2023. The big banks’ prime rate goes from 4.45% to 4.70% on October 29. On a $500,000 variable mortgage that’s about $68 a month more. Fixed rates don’t follow the Bank. They follow bond yields, which had already pushed them up this year.
If you hold a variable rate, are buying in Ottawa this winter or renew in the next year, here is what changed today and what didn’t.
Why did the Bank of Canada raise rates?
Inflation. The Bank said the conflict in the Middle East, now in its eighth month, is keeping energy prices high for longer. Inflation has been around 3% since April and the Bank expects about 3½% by the end of the year. Without gasoline it was 2.2% in September, and the Bank’s core measures are near 2%. It raised rates to stop high energy costs spreading into the price of everything else (Bank of Canada, October 28, 2026).
The Bank said “there could be a need to increase the policy rate further,” and that it will proceed carefully. The next decision is December 9.
What happens to my variable-rate mortgage?
Prime rises 0.25 points from October 29 (RBC, TD), so a variable rate tied to prime rises by the same amount. How you feel it depends on your mortgage:
- Adjustable payment: your payment goes up, usually from your next payment.
- Fixed payment: the payment stays the same, but more of it goes to interest and less to your balance.
Here’s a $500,000 insured mortgage over 25 years at the best insured variable we track, prime minus 0.75%:
| Rate | Monthly payment | |
|---|---|---|
| Variable before the hike (prime 4.45%) | 3.70% | $2,557 |
| Variable after the hike (prime 4.70%) | 3.95% | $2,625 |
| Variable if the Bank raised twice more | 4.45% | $2,765 |
| Best insured 5-year fixed today | 4.64% | $2,806 |
Variable payments use monthly compounding and fixed uses semi-annual. The “twice more” row is arithmetic, not a forecast.
Did fixed rates go up too?
They already had. Fixed rates are priced off Government of Canada bond yields, and the 5-year yield climbed from 2.67% on February 27 to 3.57% on October 27 (Bank of Canada). The best insured 5-year fixed we track for Ontario borrowers went from 4.24% in July to 4.64% now, while the Bank held at 2.25% all year.
So today’s hike narrows the gap. The best insured variable was 0.94 points under the best fixed yesterday. Now it’s 0.69. Our post on taking variable when it’s cheaper than fixed walks through how to weigh that gap.
Does this change what I can qualify for?
On a fixed rate, no. You’re tested at your contract rate plus 2%, so 4.64% qualifies at 6.64%, the same as before.
On a new variable approval, yes. The qualifying rate moves with prime, from 5.70% to 5.95%. For a household earning $110,000 with $500 a month for property tax and heat:
| Qualifying rate | Maximum mortgage (39% of income for housing) |
|---|---|
| 5.70% (variable, before) | about $494,000 |
| 5.95% (variable, after) | about $483,000 |
| 6.64% (5-year fixed) | about $453,000 |
About $11,000 less on a variable. Debts, a co-borrower or a longer amortization move that number far more.
What’s the Ottawa market doing?
The Ottawa Real Estate Board’s September numbers, the latest out, had 1,010 sales, down 6.6% from a year earlier, and an average price of $685,640, down 1.0%. Active listings rose 7.9% to 4,813, and inventory reached 4.8 months, the highest for a September in a decade (OREB, October 5, 2026). Apartments had 7.3 months of inventory.
The board said affordability and borrowing costs continue to hold demand back. For a buyer with financing in place, that means more choice and more room to negotiate. A 3% difference on a $685,000 home is about $20,000, which is worth more than a quarter point.
What should I do now?
- Variable with an adjustable payment: check your next statement and make sure the new payment fits if the Bank moves again in December.
- Variable with a fixed payment: ask your lender where your trigger rate is, the point where the payment stops covering the interest.
- Buying: get a rate hold. It protects you from a rise before you buy. It doesn’t get you a lower rate than today’s.
- Renewing in the next year: start about 120 days before your maturity date, and compare fixed and variable at today’s prices.
When does this not apply?
If you’re partway through a fixed term, nothing changes until you renew. If your lender sets its own prime rate, check its notice; the numbers here use the big-bank prime. And if your file is a term contract, a new business or a probation period, how the lender reads your income usually matters more than the rate.
Want to see what this does to your own payment or approval? Book a 20-minute call with Joshua.
Frequently asked questions
Did the Bank of Canada raise rates on October 28, 2026?
Yes. It raised its policy rate by 0.25 points to 2.50%, its first increase since July 2023. Prime at the big banks rises from 4.45% to 4.70% on October 29.
How much will my variable payment go up?
About $14 a month for every $100,000 owing on a 25-year amortization, so about $68 a month on $500,000. If your payment is fixed, it stays the same and more of it goes to interest.
Did the rate hike raise fixed mortgage rates?
Not directly. Fixed rates follow Government of Canada bond yields, which had already risen this year. The best insured 5-year fixed we track for Ontario borrowers was 4.64% on October 28.
Is variable still cheaper than fixed?
Today, yes. The best insured variable we track is 3.95% on the new prime, against 4.64% for the best insured 5-year fixed. The gap narrowed from 0.94 points to 0.69.
When is the next Bank of Canada decision?
December 9, 2026. The Bank said there could be a need to raise rates further.
This is general commentary, not financial advice. Rates are the best we tracked from lender rate sheets as of October 28, 2026, and can change daily.
