It already happened — and there is a good chance you have not felt it yet.
On October 28, the Bank of Canada raised its policy rate for the first time since July 2023. If your mortgage payment comes out mid-month, the higher cost may not have touched your bank account yet. If your payment is fixed-dollar variable, it may never visibly change at all — while quietly costing you more every month.
A rate hike you cannot see is still a rate hike. So let us walk through what changed, what it costs in real dollars, and the one date that matters next: December 9.
So what actually changed on October 28?
The Bank raised its target for the overnight rate by a quarter point, from 2.25% to 2.50%. The Bank Rate is now 2.75% and the deposit rate 2.45%. The big banks followed within hours: prime — the rate your variable mortgage and HELOC are built on — rose from 4.45% to 4.70%, effective October 29. (TD’s mortgage prime: 4.85%.)
That ended seven straight holds — and it was no surprise hiding in the fine print: we flagged weeks ago that a hike was actually on the table.
Why did the Bank do it? In its own words, it acted “to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services.” Inflation was 3.1% in September, and the Bank’s new Monetary Policy Report expects it to reach about 3.5% by the end of this year, average 3.1% through 2027 — with food inflation around 4% — and not return to the 2% target until the middle of 2028.
What does a quarter point actually cost you?
Forget the percentages. Here is the money, using one consistent example: an adjustable-rate variable mortgage with 25 years left, your rate moving the full quarter point, from 4.50% to 4.75%.
| Mortgage balance | Payment before | Payment now | Extra per month | Extra per year |
|---|---|---|---|---|
| $200,000 | $1,112 | $1,140 | +$29 | +$343 |
| $350,000 | $1,945 | $1,995 | +$50 | +$600 |
| $500,000 | $2,779 | $2,851 | +$71 | +$857 |
The rule of thumb worth memorizing: about $14 a month for every $100,000 you owe. Not a disaster. Not nothing, either — especially if December brings a second one.
But not every variable mortgage works this way:
- Adjustable-rate variable: your payment itself rises, usually on your next payment date after the lender’s prime changes. This is the table above.
- Fixed-payment variable: your payment does not change by a cent — and that is the trap. More of each payment now goes to interest, less to principal, and your amortization quietly stretches. If rates rise far enough that your payment no longer covers the interest, you reach what lenders call the trigger point, and your payment can be raised or the shortfall added to your balance. The FCAC’s guidance on mortgage difficulties explains how the trigger rate works, and your own contract states your number. One hike will not get most people there — but it moves everyone a step closer, and you should know your distance.
- HELOCs and lines of credit: interest-only cost rises by about $20.83 a month for every $100,000 drawn. On a $50,000 HELOC balance, that is roughly $10 more a month, every month, until the balance comes down.
- Fixed-rate mortgages: nothing changes until renewal. Nothing. Your rate was set by the bond market on the day you signed, not by the Bank’s announcement.
Fixed or variable — who actually feels this, and when?
Variable borrowers feel it now. Fixed borrowers feel it later, at renewal — and here is the part most headlines miss: fixed rates do not follow the Bank of Canada directly. They follow the 5-year Government of Canada bond yield, which sat around 3.62% at the hike, and Big Six posted 5-year fixed specials are running about 5.04% to 5.39%. The bond market had already priced in much of this move before the Bank said a word.
So if you are renewing in the next year, the hike matters to you mainly as a signal — and our mortgage renewal guide walks through how to shop the renewal instead of just signing it.
And savers? A small silver lining, with a familiar catch: higher policy rates eventually nudge savings and GIC rates up, but banks are slower to raise what they pay you than what they charge you. If your cash is parked long-term, the high-yield savings trap is the bigger cost — and if that cash sits in a TFSA, mind the TFSA mistakes that quietly cost Canadians thousands.
Why is everyone watching December 9?
Because the Bank left the door open. Its statement said there “could be a need to increase the policy rate further,” but that it agreed to “proceed carefully” — one meeting at a time. The next meeting is December 9, at 9:45am ET, the last decision of 2026.
Are forecasters sure another hike is coming? Not even close. Estimates genuinely split: one major forecaster puts the odds of a December hike around 65%, while a major mortgage platform’s bond-based page puts it closer to 45% hike, 55% hold. When the experts’ range is that wide, the honest answer is “nobody knows” — and anyone telling you otherwise is selling something.
Two releases between now and then will move those odds:
- November 6 — jobs data. A resilient labour market gives the Bank cover to hike; a weak one argues for patience.
- November 16 — October inflation (CPI). The big one. A print near the Bank’s 3.5% year-end path makes a hike more likely; a cooler one strengthens the hold case.
Update, November 6: the first of the two numbers this article flags has landed — and it came in soft. Canada lost 4,700 jobs in October, against expectations of a gain of about 13,600, and the unemployment rate rose to 6.7% from 6.5%, with full-time jobs down 18,100 and private-sector jobs down 52,500. A weak labour market argues for patience at the Bank of Canada, so the odds of a second hike on December 9 have tilted a little toward a hold — but the October inflation reading on November 16 is still to come, and that is the number that will matter most.
You do not need to forecast either number. You just need your budget to survive both outcomes.
What should you do before December 9?
Nothing dramatic. A few quiet checks:
- Know which variable you hold. Adjustable payment or fixed payment? Your mortgage statement or contract says. If it is fixed-payment, find your trigger point while it is still a curiosity, not a crisis.
- Run your number at one more hike. Take your balance, apply the $14-per-$100,000 rule again, and look at the total. If your budget absorbs it, December 9 becomes interesting instead of stressful.
- Do not rush to lock in out of fear. Converting to fixed means taking today’s fixed rates, which already price in this hike. Locking in is a legitimate choice for sleep-at-night reasons. It is a poor reaction to a single headline.
- Renewing within six months? Start shopping now, not at maturity. Get competing quotes and a rate hold; your lender’s first offer is a starting point, not a verdict.
- Carrying a HELOC balance? Re-price it in your head. Every $100,000 drawn just got $20.83 a month more expensive, and it will not pay itself down. Even a small extra principal payment is worth more now than in October.
- Protect the buffer, keep the habits. A payment bump is exactly the kind of slow leak an emergency fund exists for — these emergency fund myths cover the setup mistakes to avoid. And if your automatic investing still fits after the new payment, let it run: starting — and keeping — the habit matters more than any single rate decision.
The bottom line
October 28 was the Bank telling us the rate-cut era is not just paused — it may be reversing. December 9 will tell us whether it meant it.
But notice what did not change: the arithmetic of your household. A quarter point is $29 a month on $200,000, $71 on $500,000. Real money, budgeted money, manageable money — if you look at it early instead of late. It is the same thinking behind not betting your whole financial life on one paycheque: a household that depends on fewer things it cannot control bends instead of breaking when one of them moves.
That has always been the real divide. Not fixed versus variable, not bull versus bear. The people who come through rate cycles fine are not the ones who predicted them. They are the ones who knew their numbers before the announcement, not after.
Call December 9 a countdown, not a crisis. Count down with your eyes open.
Rates and figures as of the Bank of Canada’s October 28, 2026 announcement. We will update this article after the December 9 decision.