By Josh Tagg, mortgage broker · Mortgages for Less with INDI Mortgage · Calgary, serving all of Alberta ·
Quick answer: On October 28, 2026 the Bank of Canada raised its policy rate a quarter point, from 2.25% to 2.50%, its first increase since July 2023. Prime goes from 4.45% to 4.70%. On a variable mortgage that floats with prime, that’s about $13 a month more for every $100,000 owed on a 25-year amortization. A new variable at prime minus 1% (3.70%) is still about $51 a month cheaper per $100,000 than a 4.64% five-year fixed.
Here’s Josh on what today costs you, and why he’d still take variable.
Why did the Bank of Canada raise rates in October 2026?
Oil. The Bank said the conflict in the Middle East is now in its eighth month with no clear path to resolution, and energy prices have stayed high. CPI inflation has been around 3% since April, and the Bank expects it to reach about 3½% by the end of the year (Bank of Canada, October 28, 2026).
Take gasoline out and the picture is calmer. Inflation excluding gasoline was 2.2% in September, and core measures remain close to 2%. The worry is what comes next. In the Bank’s words, it raised rates “to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services.”
Canada wasn’t first to move. The European Central Bank began raising in June (European Central Bank), and Canada was one of the last big economies still on hold. Not anymore.
How much does a quarter-point hike add to my variable payment?
About $13 a month for every $100,000 of mortgage, on a 25-year amortization. On $400,000, it’s about $53 a month. Annoying, not a crisis.
Variable payment before and after the October 28 hike (prime minus 1%, 25-year amortization)
| Mortgage | At 3.45% (before) | At 3.70% (after) | Change per month |
|---|---|---|---|
| $100,000 | $497 | $510 | +$13 |
| $400,000 | $1,987 | $2,040 | +$53 |
Whether your payment actually changes depends on the kind of variable you have. With an adjustable-payment variable, the payment resets each time prime moves. With a static-payment variable, the payment stays the same and more of it goes to interest, so less goes to paying down the balance. Your mortgage documents say which one you have.
Is variable still cheaper than fixed after the hike?
Yes, from day one. The best new 5-year fixed I’m quoting today is 4.64%, and many lenders are higher. A new variable can be as low as prime minus 1%, which is 3.70% after today. That’s still almost a full percentage point apart.
Per $100,000 on a 25-year amortization, the fixed payment is about $561 a month and the variable is about $510. The fixed costs about $51 a month more from the first payment.
Where are rates going after October 2026?
The Bank left the door open. It said “there could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully.” The next decision is December 9, 2026.
The number I watch is the 2-year Government of Canada bond yield, because it moves before the Bank does. It was 2.39% on February 27 and 3.36% on October 27, up about a full point (Bank of Canada bond yields). That’s the market pricing in more hikes.
Capital Economics, a research firm I follow closely, expects two more increases next year, taking the Bank to 3.00% by April 2027. The Bank’s own forecast has inflation averaging 3% in 2027 and coming back to 2% by the middle of 2028. So the likely shape is up a little, then back down. That’s a forecast, not a promise.
If you’re shopping for a fixed rate, there’s one more thing. Bond markets hate inflation, so a central bank that gets serious about it can calm bond yields. If that happens here, fixed rates could ease a bit. Could, not will.
Fixed or variable: which costs less over five years?
I ran a five-year term on $100,000, with the variable payment resetting every time prime changes. Variable comes out ahead on every path except one: the Bank raises rates five more times after today and stays there for the whole term.
Five-year interest cost per $100,000: variable at prime minus 1% vs a 4.64% fixed
| Rate path after today | Bank of Canada rate reaches | Highest variable payment | Variable interest vs fixed |
|---|---|---|---|
| Capital Economics: two more hikes by April 2027 | 3.00% | $537 | $2,301 less |
| Market pricing: three more hikes by summer 2027 | 3.25% | $550 | $1,300 less |
| Four more hikes by mid-2027 | 3.50% | $564 | $191 less (about a tie) |
| Five more hikes by late 2027 | 3.75% | $577 | $750 more |
| 5-year fixed at 4.64% | n/a | $561 | $21,676 total interest |
Each path holds the Bank’s rate at its peak for the rest of the five years, with no cuts. Even in the worst case on this table, the variable costs about $750 more per $100,000 over five years than the fixed.
When should you take the fixed rate anyway?
Variable isn’t for everyone, and rates could go higher than any of these paths. If a $50 change in your payment would keep you up at night, take the fixed. That’s a real reason. Your sleep is worth something.
Fixed also makes sense if your budget has no room for payments to rise, or if you’d rather not think about the Bank of Canada again for five years. The rates in this post are today’s best quotes. Yours will depend on your down payment, the property and the lender.
Frequently asked questions
Did the Bank of Canada raise rates on October 28, 2026?
Yes. It raised its target for the overnight rate by 25 basis points to 2.50%, its first increase since July 2023. The Bank Rate is now 2.75% and the deposit rate 2.45%.
What is prime rate after the October 2026 hike?
Prime moves from 4.45% to 4.70%, the same quarter point as the Bank of Canada’s rate.
How much will my variable mortgage payment go up?
About $13 a month per $100,000 owed on a 25-year amortization, so about $53 a month on $400,000. If you have a static-payment variable, your payment stays the same and more of it goes to interest.
Should I lock into a fixed rate now?
Not just because of today’s hike. A 4.64% five-year fixed is still about $51 a month more per $100,000 than a variable at 3.70%. In my five-year scenarios, fixed only comes out ahead if the Bank raises five more times and holds there for the term. If you couldn’t handle a rising payment, fixed is the safer choice.
When is the next Bank of Canada rate announcement?
December 9, 2026. The Bank said there could be a need to raise rates further, but that it will proceed carefully.
Will fixed mortgage rates go up after the hike?
Fixed rates follow bond yields, not the Bank’s rate directly. The 2-year Government of Canada yield has already risen about a full point since late February. If markets decide the Bank is getting inflation under control, fixed rates could ease a bit, but that isn’t guaranteed.
Want to see your own mortgage both ways? Book a call and I’ll run your numbers through these same scenarios, so you can decide for yourself.
This is commentary, not advice. Rates and figures as of October 28, 2026. The Bank of Canada decision, inflation figures and forecast are from the Bank’s October 28, 2026 press release. The 4.64% five-year fixed and the prime minus 1% variable are Josh’s own best quotes on October 28, 2026. Payments use semi-annual compounding and a 25-year amortization. Scenario paths start November 2026 and are illustrations, not forecasts. All mortgages are subject to lender approval. Josh Tagg, Mortgages for Less, a team at Indi Mortgage.
