Bank of Canada Rate Hike in 2026? What It Could Mean for Your Mortgage

Short answer: a hike on October 28 isn't widely expected, and forecasters disagree about what comes after. The Bank of Canada's policy rate is 2.25% today, and it has held there at every decision in 2026 ^[1]. According to the Canadian Real Estate Association, markets are pricing in about 100 basis points (1 percentage point) of hikes over the next 12 months, though the consensus of economists' forecasts leans toward less than that ^[3]. Fixed mortgage rates have already adjusted to those expectations.

The good news is that the most important decisions are in your hands: when you lock a rate, whether fixed or variable suits your budget, and whether you shop your renewal. Here's what to know if you're buying, holding a variable rate, or renewing soon.

Update, October 19, 2026: CMHC's chief economist doesn't expect a hike this year

Speaking at Mortgage Professionals Canada's National Mortgage Conference in Calgary this weekend, CMHC chief economist Mathieu Laberge said, "I don't see rates going up anytime soon." ^[13] His early view is that the Bank of Canada holds for the rest of 2026, pointing to a soft job market and to inflation driven largely by global oil prices and supply chains, which interest rates can do little about. He said hikes could return in 2027, possibly in late Q1 or early Q2 rather than CMHC's earlier mid-2027 forecast, and stressed this was preliminary thinking, not a finalized forecast ^[14].

Laberge also cautioned that if builders pull back too far during today's slower market, Canada could face another housing shortage once demand recovers ^[15]. Separately, Statistics Canada reported today that inflation was 3.1% in September, mostly because of gasoline. Excluding gasoline, it was 2.2% ^[16].

What it means for you: forecasts differ, so plan for a range rather than a single prediction. If you're renewing within six months, a rate hold protects you if rates rise, and you can ask your lender whether you'd get a lower rate if one comes along.

When is the next Bank of Canada announcement?

The next decision is Wednesday, October 28, 2026, at 9:45 a.m. ET, together with the Bank's Monetary Policy Report. The last scheduled decision of the year is Wednesday, December 9 ^[2]. Industry coverage suggests a hold is widely expected on October 28, with some economists pointing to December or later for any change ^[6][13]. That's commentary, not a Bank of Canada signal.

What would make the Bank of Canada raise rates?

The Bank sets its policy rate to keep inflation near its 2% target, the midpoint of a 1% to 3% control range ^[12]. A hike becomes more likely if inflation looks set to stay above target, for example because energy prices keep climbing or wage and price growth stays strong. A softer job market or a slower housing market points the other way. That's why the Bank's October 28 Monetary Policy Report matters as much as the decision itself. It will show how the Bank sees growth and inflation over the next two years ^[2].

Why have fixed mortgage rates gone up before the Bank of Canada moves?

Because fixed and variable rates are priced off different markets.

• Fixed rates follow the bond market, mainly the 5-year Government of Canada yield, which reflects where investors expect rates and inflation to go. The 5-year yield averaged 3.06% in June, 3.28% in August, 3.57% in September and about 3.58% so far in October (to October 15) ^[4]. Lenders have repriced their fixed rates to match. If expectations ease, yields and fixed rates can come back down too.

• Variable rates are set at prime plus or minus a discount. Prime follows the Bank of Canada's policy rate. The big banks' prime rate is 4.45% ^[5], unchanged because the Bank hasn't moved.

CREA points to the same drivers: rising oil prices since early September and a more hawkish tone from the Bank of Canada nudged fixed rates higher ^[3].

From our desk: Clients ask why their fixed quote went up when 'the Bank didn't do anything.' The bond market moves every day. The Bank of Canada moves eight times a year. Fixed rates react to what markets expect the Bank to do, and those expectations can shift in either direction.

Fixed vs variable mortgage in Canada right now

The gap between fixed and variable changes weekly and differs by lender, so check today's rates rather than relying on a headline. A simple way to decide: if variable rates rose by the amount markets are pricing in, would the payment still work for you? If yes, you have a real choice. If not, fixed gives you certainty.

Illustration (OAC, not an offer): on a $400,000 balance with 20 years left, a variable rate going from 4.25% to 5.25% would raise the monthly payment from about $2,477 to $2,695, roughly $218 more. Compare that against a fixed quote using our mortgage payment calculator.

See today's best rates for your situation. Fixed and variable, compared across 65+ lenders. Compare today's rates

If you already have a variable rate

How a hike would affect you depends on the type of variable mortgage you have:

• Adjustable payment (ARM): your payment changes when prime changes, so your amortization stays on track.

• Fixed payment (VRM): your payment stays the same, but more of it goes to interest if prime rises. If rates rose far enough to reach your lender's trigger point, the lender may ask you to raise your payment or make a lump-sum payment. Your annual prepayment privileges can help keep you well clear of it.

Check your mortgage statement or call your lender to find out which one you have. Most variable mortgages let you convert to a fixed rate during the term, usually for a term at least as long as what's left on yours. You won't pay a penalty, but you'll get the lender's posted or offered fixed rate, not necessarily the best one in the market. Ask what that rate is before you decide.

What CREA's latest forecast says about the housing market

On October 16, CREA updated its 2026 forecast. It now expects 444,530 MLS® sales in 2026, a 5.2% decline from 2025. The national average price is forecast to edge up 0.2% to $681,681, with prices down 3% in Ontario and 0.8% in British Columbia ^[3]. CREA said higher fixed mortgage rates and uncertainty about variable rates were the main reasons. Its forecast for 2027 (sales up 4.4%) assumes limited action by the Bank ^[3].

For buyers, a slower market can mean more room to negotiate in Ontario and B.C. Getting pre-approved and holding a rate early helps you shop with confidence.

The renewal angle: what to do if you're renewing in the next 6–12 months

1. Get a rate hold. Lenders can hold a rate for about 60–130 days depending on the lender ^[8]. If rates fall before closing, ask whether you'll automatically get the lower rate. FCAC suggests asking exactly that ^[8].

2. Don't auto-renew. Federally regulated lenders must send your renewal statement at least 21 days before your term ends, and FCAC notes you may be able to negotiate below the rate offered ^[9].

3. Switching is easier than it used to be. If you move an uninsured mortgage between federally regulated lenders without increasing the amount or amortization, OSFI no longer requires the stress test ^[10]. Insured mortgages can also switch without a new stress test ^[11].

4. Decide fixed vs variable on your budget, not a forecast. If a 1-point increase would stretch your budget, the certainty of a fixed rate may be worth it.

5. Consider term length. Shorter fixed terms or a variable rate keep you flexible if you think rates will ease. A 5-year fixed rate buys stability.

Choices to think twice about

• Locking into a 5-year fixed in a hurry when your budget can handle some variable-rate movement and you might sell, refinance or move within a few years. Breaking a fixed mortgage can be expensive ^[7]. A shorter term may suit you better.

• Staying on a variable rate your budget couldn't absorb if prime rose. Converting to fixed or increasing payments now are both options.

• Relying on any single rate prediction, including ours. Plan for a range of outcomes, and you'll be comfortable whichever way rates go.

A rate hike is one possible scenario, not a certainty, and fixed rates have already adjusted to market expectations. If your term ends in the next year, hold a rate, compare widely, and choose the product your budget is comfortable with in either scenario. For a closer look at the 2027 outlook, see will mortgage rates go up in 2027.

Run the numbers. Compare fixed and variable payments side by side. Open the payment calculator

This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.

Rate data is from the Bank of Canada as of October 15, 2026 (bond yields) and October 14, 2026 (prime), and inflation data from Statistics Canada (released October 19, 2026). Forecasts and market expectations are third-party views, not 8Twelve predictions.