Bank of Canada rate hike: how much will your variable mortgage rise?
In Quebec, the Bank of Canada raised its policy rate by 0.25 points on Wednesday, October 28, 2026, to 2.50%. An adjustable variable mortgage of $400,000 at 3.95%, amortized over 25 years, rises from $2,093 to $2,148 a month: +$54 a month, +$653 a year. The Bank cited inflation that is higher and more persistent than expected: CPI inflation has been around 3% since April and is expected to rise to about 3.5% by the end of the year, with a risk that high energy prices spread to other prices.
The decision was announced on Wednesday, October 28, 2026, at 9:45 a.m. Eastern, alongside the Monetary Policy Report. Economists were split: a Reuters poll conducted October 21 to 23 found 19 of 34 economists expecting a hike to 2.50%, while the C.D. Howe Institute's Monetary Policy Council recommended holding at 2.25% instead.
Run your own scenario in 30 seconds: enter your balance, your current rate and your remaining amortization in our Quebec mortgage calculator, then run it again with a rate 0.25 points higher. The difference between the two payments is your real October 28 risk.
Will the Bank of Canada really raise its rate on October 28, 2026?
Yes — it did, at 9:45 a.m. on October 28, 2026, raising its rate by a quarter point to 2.50%, its first change since the October 29, 2025 cut. What was verified before the announcement: the policy rate had been 2.25% since that cut, the Bank held it there on September 2, 2026, and September 2026 inflation reached 3.1% in Canada and in Quebec, just above the 1% to 3% target range. Gasoline did much of the work: +27.8% year over year in Canada.
The two readings clashed. The hike case — the one the Bank acted on: headline inflation above 3% and high energy prices risked spreading to other prices if the Bank did not act. The hold case: excluding gasoline, inflation was only 2.2% in September, and core inflation measures eased. The next decision after this one is already set: December 9, 2026. Our permanent next Bank of Canada announcement page tracks the schedule and the current rate, and our article on the December 9, 2026 decision explains what will be at stake next.
How much does your variable payment rise if the rate goes up 0.25 points?
For an adjustable-payment variable mortgage, budget roughly $14 more per month for every $100,000 of balance, for each 0.25-point hike, at a rate and amortization similar to the example below. The table uses Canadian semi-annual compounding, a remaining amortization of 25 years and a starting rate of 3.95% — a worked example, not a lender quote.
| Remaining balance | At 3.95% | At 4.20% (+0.25) | At 4.45% (+0.50) | Monthly increase (+0.25) |
|---|---|---|---|---|
| $100,000 | $523 | $537 | $551 | +$14 |
| $200,000 | $1,047 | $1,074 | $1,101 | +$27 |
| $300,000 | $1,570 | $1,611 | $1,652 | +$41 |
| $400,000 | $2,093 | $2,148 | $2,203 | +$54 |
| $500,000 | $2,617 | $2,685 | $2,753 | +$68 |
Two details change everything. First, the longer your remaining amortization, the bigger the monthly jump, because interest weighs more heavily early on. Second, hikes stack: two 0.25-point hikes by spring — a scenario part of the polled economists expect — would cost about $110 more per month on a $400,000 balance, over $1,300 a year. Test your own numbers with the mortgage payment calculator instead of transposing this example blindly.
What changes if your variable mortgage has fixed payments?
Your payment does not move, but its makeup does: a larger share goes to interest and a smaller share repays your principal. On a $400,000 balance, the first month's interest rises from about $1,306 at 3.95% to about $1,388 at 4.20% — roughly $82 more in interest and $82 less in principal, from the very first month, without your payment changing by a cent.
The risk has a name: the trigger rate. It is the rate at which your fixed payment covers only interest, then not even all the interest. The Financial Consumer Agency of Canada (FCAC) warns that at that point, unpaid interest is added to your balance: that is negative amortization, and your mortgage starts growing again. Every 0.25-point hike brings you closer to that threshold if you are already tight. Check the trigger point stated in your mortgage contract, and ask your lender where it sits today.
Does your HELOC and other variable debt move too?
Yes, and often faster than the mortgage. A home equity line of credit is almost always variable, priced off your lender's prime rate. That prime rate stood at 4.45% when the policy rate was 2.25%; the October 28 quarter-point hike normally takes it to 4.70%, and interest on a drawn HELOC of $100,000 rises from $371 to $392 a month, interest only: +$21 a month, +$250 a year.
For credit cards, nothing changes on October 28 — but if you are paying 20% or more on a card while worrying about +0.25% on your mortgage, the order of priorities is backwards. Our guide to negotiating your credit card rate with a script gives you the exact words to use on the phone.
You have a fixed-rate mortgage: are you sheltered?
During your current term, yes, completely: your rate and payment are locked until renewal, whatever happens on October 28. The risk simply moves in time — it waits for you at renewal, at whatever the market rate is that day. That is exactly the shock worked out in our guide to 2026 mortgage renewals in Quebec.
One effect is often missed: new fixed rates follow bond yields, not the policy rate day to day, and yields already rose in the fall of 2026. If you are shopping for a purchase or a near renewal, a pre-approval that locks a rate has real value, hike or no hike on October 28.
What should you actually do before and after the October 28 announcement?
Before the next announcement, on December 9, three steps that take under an hour. One: note your mortgage type (adjustable variable, fixed-payment variable, or fixed), your balance and your current rate — all three are on your statement or banking portal. Two: calculate your payment at +0.25 and +0.50 points with our mortgage calculator and check your budget can absorb it; to see the room left after payday, cross-check with the Quebec net pay calculator. Three: if you have fixed payments, find your trigger rate in your contract.
The scenario that happened is the hike. With adjustable payments: plan for the new amount from the next payment on, since lenders generally adjust prime within days. With fixed payments: ask your lender for your new amortization schedule; a small prepayment or a modest voluntary payment increase can keep you well clear of the trigger rate for a few dozen dollars a month.
Worked example: a Longueuil couple with a $400,000 balance
Here is a complete case, calculated for this article. Balance: $400,000. Current adjustable variable rate: 3.95%. Remaining amortization: 25 years. Current payment: $2,093 a month. The scenario that landed on October 28 is the 0.25-point hike: rate at 4.20%, payment at $2,148, i.e. +$54 a month and +$653 over 12 months. (A hold would have left the payment unchanged at $2,093.) Two hikes by spring (4.45%): payment at $2,203, i.e. +$110 a month and +$1,314 over 12 months.
The lesson: the total gap between scenarios is about $110 a month for this couple. If your budget can absorb the worst case in the table, the October 28 decision is news, not stress — and that test, not a prediction about the Bank, should decide whether you change anything.
Frequently asked questions
What is the Bank of Canada's current policy rate?
The policy rate is 2.50%, since the quarter-point hike on October 28, 2026 — it had been 2.25% since the October 29, 2025 cut, through seven consecutive holds. The next announcement is Wednesday, December 9, 2026 at 9:45 a.m. Eastern, the last decision of the year.
How much does a $400,000 variable mortgage rise if the rate goes up 0.25 points?
With 25 years of amortization remaining and a rate moving from 3.95% to 4.20%, the monthly payment on an adjustable variable mortgage rises from about $2,093 to $2,148: +$54 a month, roughly +$653 a year. Rule of thumb: about $14 more per month per $100,000 of balance, per 0.25-point hike.
My variable mortgage has fixed payments: will my payment go up?
Not automatically. Your payment stays the same, but a larger share goes to interest and a smaller share repays principal. The danger is the trigger rate: once your payment no longer covers the interest, unpaid interest is added to your balance (negative amortization). Ask your lender at what rate your trigger point sits.
Will bank prime rates rise at the same time as the policy rate?
Generally, yes: the big banks adjust their prime rate within days of a Bank of Canada decision, usually by the same amount. With the policy rate at 2.50% since October 28, 2026, prime normally moves from 4.45% to 4.70%. Variable mortgages and HELOCs priced off prime follow the move.
Does a policy rate hike change anything for a fixed-rate mortgage?
Not during your term: your rate and payment are locked until renewal. The effect shows up at renewal, at the market rate on that day. However, new fixed rates offered today already move with bond yields, which rose in the fall of 2026 — so a rate-lock pre-approval can be worth money even before the announcement.
When is the next Bank of Canada decision after October 28, 2026?
Wednesday, December 9, 2026, at 9:45 a.m. Eastern, according to the Bank's official schedule. It is the last of the eight decisions scheduled for 2026. After the October 28 hike, all eyes turn to December, with October inflation data published in mid-November in hand.
Official sources
- Banque du Canada — Annonce du taux directeur du 28 octobre 2026
- Banque du Canada — Maintien du taux directeur à 2,25 % (2 septembre 2026)
- Agence de la consommation en matière financière du Canada — Gérer votre argent lorsque les taux d'intérêt augmentent
- Agence de la consommation en matière financière du Canada — Intérêt des hypothèques
- Institut de la statistique du Québec — Indice des prix à la consommation (septembre 2026)
- Bank of Canada — Policy rate announcement, October 28, 2026 (quarter-point hike to 2.50%)