The Bank of Canada announces its next interest rate decision on Wednesday, October 28, 2026 at 9:45 a.m. ET – and for the first time in a year, most economists now expect a hike, not a cut. In a Reuters poll taken October 21–23, 19 of 34 economists forecast a quarter-point rise from 2.25% to 2.50%, and a majority expect one more hike by the end of March 2027. On a $400,000 variable-rate mortgage, one hike adds about $54 a month; two add about $108.
Update, October 28: The hike to 2.5% went ahead, and our follow-up, Bank of Canada Rate Hike to 2.5%: Your 7-Step Mortgage Checklist, covers what to do now.
*Illustrative: 25-year amortization, 3.70% rising to 3.95%. Our calculation.
Why the forecast flipped from cut to hike
Earlier this month, many Canadians were still expecting the next move to be a cut – including our own earlier preview of the October 28 decision. That has changed fast. In Reuters' previous poll, 80% of economists expected the Bank to hold at 2.25% until the end of 2026. Interest-rate futures moved from about a 30% chance of an October hike to roughly three in four, Reuters reported on October 23.
Three things drove the shift. First, inflation: Statistics Canada reported that consumer prices rose 3.1% in the 12 months to September, up from 3.0% in August and just above the Bank's 1–3% target range. Gasoline prices were up 27.8% year over year. Second, the Bank's own business survey showed inflation expectations rising sharply. Third, markets read Governor Tiff Macklem's recent remarks as a signal that a hike was coming.
Not everyone agrees. Economists expecting a hold point to a weak economy – growth is forecast at just 1.0% for 2026 in the same poll – and to the fact that inflation excluding gasoline was only 2.2% in September. So treat a hike as likely, not certain.
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How a hike reaches your mortgage
Canadian lenders set their prime rate off the Bank's policy rate. Prime is currently 4.45%, and has been since the Bank's last cut in October 2025. If the Bank raises its rate by 0.25 points, prime usually follows within a day – to about 4.70%. A second hike by March would take it to about 4.95%.
What happens next depends on your mortgage type, as the Financial Consumer Agency of Canada (FCAC) explains:
| Your mortgage | What changes after a hike | When you feel it |
|---|---|---|
| Variable rate, adjustable payment | Your monthly payment goes up | Usually your next payment cycle |
| Variable rate, fixed payment | Payment stays the same, but more of it goes to interest and less to the balance | Quietly – your amortization stretches |
| Fixed rate | Nothing until renewal | At renewal, if rates are higher |
| HELOC / line of credit | Interest charged rises with prime | Next statement |
Based on FCAC descriptions of mortgage types.
Your payment, calculated: one hike vs. two
We ran the numbers for four balances on a variable-rate mortgage with an adjustable payment, a 25-year amortization and an illustrative starting rate of 3.70% (prime minus 0.75). Canadian mortgage interest is compounded semi-annually, which we used in the calculation.
| Balance | Payment now (3.70%) | After 1 hike (3.95%) | Extra per year | After 2 hikes (4.20%) | Extra per year |
|---|---|---|---|---|---|
| $300,000 | $1,530 | $1,570 (+$40) | $483 | $1,611 (+$81) | $973 |
| $400,000 | $2,040 | $2,093 (+$54) | $645 | $2,148 (+$108) | $1,298 |
| $500,000 | $2,549 | $2,617 (+$67) | $806 | $2,685 (+$135) | $1,622 |
| $600,000 | $3,059 | $3,140 (+$81) | $967 | $3,222 (+$162) | $1,946 |
Illustrative. Monthly payments, 25-year amortization, semi-annual compounding. Your rate, balance and remaining amortization will differ.
Here's the moment that surprises most households: two quarter-point hikes on a $500,000 mortgage cost about $1,622 a year. And if you're on a fixed-payment variable mortgage, you won't see that money leave your account at all: on a $400,000 balance, the share of your first payment going to interest would rise from about $1,224 to $1,306 after one hike, so roughly $82 a month less comes off your principal.
The tool for this moment
A rate hike is really a budget question: where will the extra $54, $108 or $162 a month come from? Seeing your whole household on one page makes that answer clear before the first higher payment lands.
The Matriarch Money Dashboard – Budget Spreadsheet
- Plug in your new mortgage payment and instantly see the monthly gap
- Track every bill, debt and savings goal side by side – including a line of credit tied to prime
- Build a small buffer category so a second hike in early 2027 doesn't become card debt
Google Sheets & Excel file · nothing is shipped, no shipping fees · download right after purchase · print it or use it on your phone, tablet or computer · one-time purchase.
See what's inside →Two quarter-point hikes on a $500,000 variable mortgage would cost about $1,622 a year – money that has to come from somewhere in your budget.
Lines of credit feel it too
Many HELOCs and lines of credit charge prime plus a margin. On a $50,000 interest-only balance at prime + 0.50%, monthly interest would go from about $206 now to $217 after one hike and $227 after two. Small per hike – but it stacks.
Five things to do before Wednesday
1. Find out which mortgage you have. Adjustable or fixed payment? Your annual statement or online banking will say. If you're not sure, ask your lender.
2. Run your own number. Ask your lender what your payment would be at prime + 0.25 and prime + 0.50, or use a mortgage payment calculator with your exact balance and amortization.
3. Check your renewal date. If you renew in the next 6–12 months, ask whether your lender offers a rate hold. Our 7 scripts for a better renewal rate can help with that call.
4. Move a buffer now. Setting aside the 'two-hike' amount from the table each month for the next few months gives you breathing room if the second hike arrives.
5. Don't panic-switch. Breaking a mortgage can carry prepayment penalties. Get the penalty in writing and compare before you act. If you're struggling with payments, talk to your lender early and ask what relief options exist – the FCAC explains your rights in its guide Paying your mortgage when experiencing financial difficulties.
If money news is keeping you up at night, you're not alone – talking it through with someone you trust, or a professional, really does help.
Frequently asked questions
Is the Bank of Canada raising rates on October 28, 2026?
Not confirmed until 9:45 a.m. ET on October 28. A Reuters poll (Oct 21–23) found 19 of 34 economists expect a rise from 2.25% to 2.50%; markets priced roughly a three-in-four chance.
How much will my mortgage payment go up if rates rise 0.25%?
On a variable mortgage with an adjustable payment, roughly $13–14 a month per $100,000 of balance over a 25-year amortization at today's rates. That's about $54 a month on $400,000.
What will the prime rate be after a Bank of Canada hike?
Prime is 4.45% now. Lenders typically move prime by the same amount as the policy rate, so a 0.25-point hike would take it to about 4.70%.
Keep reading
Worried about your job as well as your payment? Layoff-Ready: The Income Shock Playbook walks you through a plan for an income drop.
Sources
- Bank of Canada – Interest rate announcement, October 28, 2026
- Reuters via KFGO – Bank of Canada to raise rates to 2.50% on October 28 (Oct 23, 2026)
- Statistics Canada – The Daily: Consumer Price Index, September 2026
- Financial Consumer Agency of Canada – Interest on mortgages
- nesto – Prime rate in Canada (as of Oct 23, 2026)
Educational content only. Not personalised financial advice.