Two weeks after the rate hike: what it did to mortgage rates, payments and budgets
On October 28th the Bank of Canada raised its policy rate by 0.25% to 2½%. Two weeks on, we can see what it actually did to the rates Canadians pay. The short version: variable-rate borrowers took the full hit, fixed rates rose anyway, and buyers can borrow a little less than they could a month ago.
Rates across lenders: high, low and typical. Properti Edge analysis of posted rates of 25 Canadian lenders, including the six largest banks. Weeks of October 23rd and November 6th, 2026. General information, not advice.
The range moved too. The highest 5-year fixed rate across lenders rose from 5.10% to 5.30%, and the highest 5-year variable from 4.50% to 4.70%. The lowest rates barely moved.
Who felt it first?
People who already have a variable-rate mortgage. Their rate is tied to their lender's prime rate, and prime rose by the full 0.25%. The Bank of Canada's measure of the typical prime rate at the big banks went from 4.45% to 4.70%.
Here is what that looks like on a $500,000 balance with 25 years left. At 4.00%, the monthly payment is about $2,639. At 4.25%, it is about $2,709: roughly $70 a month, or $834 a year, more. Many variable mortgages keep the payment fixed instead, in which case about $104 more of each month's payment goes to interest and less to the balance. Either way, the borrower pays.
New variable borrowers got a better deal than existing ones. The typical new variable rate rose only 0.10%, so lenders absorbed part of the hike by offering bigger discounts off prime to win new business.
Why did fixed rates rise when bond yields fell?
Lenders price fixed mortgages off Government of Canada bond yields, plus a margin. On the day of the hike, yields rose: Reuters reported the 2-year yield touched its highest level since August 2024. Then they fell. A global sell-off in AI stocks sent investors into safer government bonds, and a weak Canadian jobs report followed. The 5-year yield went from 3.62% on October 28th to 3.39% on November 5th.
Fixed mortgage rates went the other way. They had been rising since September, and lenders kept passing that through. In other words, lenders' margins widened. If yields stay lower, there is room for fixed rates to ease, but that has not happened yet.
What does it do to a buyer's budget?
The stress test does the damage here. Lenders must check that you could pay at the higher of 5.25% or your contract rate plus 2% ([OSFI](https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures)). When the typical 5-year fixed rate went from 4.70% to 4.90%, the qualifying rate went from 6.70% to 6.90%.
Say a household's income supports a qualifying payment of $3,500 a month. At 6.70%, that supports a mortgage of about $513,200 over 25 years. At 6.90%, about $504,100. That is roughly $9,100 less, or 1.8% of buying power, in two weeks. Since late September, when the typical 5-year fixed was 4.60%, the drop is about $13,700. These are illustrations, not quotes.
What do markets expect next?
The next decision is on December 9th. Expectations for another hike have faded since the decision:
Source: swap markets, as reported by Reuters on October 28th and November 6th, 2026. Market pricing, not a forecast by Properti Edge. General information, not advice.
On October 28th, swap markets had fully priced a second hike by the January decision. TD Securities said the Bank tends to move again after a long pause, and saw "a lower bar for a subsequent hike in December".
Then the economy shed 4,700 jobs in October, the third monthly loss in a row, and unemployment rose to a six-month high of 6.7%. The odds fell to 36%. LSEG data reported by The Canadian Press put them at 35% the same afternoon. CIBC's Andrew Grantham expects a hold in December if weak hiring and lower oil prices persist. Capital Economics expects no more than two further hikes before the Bank stops.
So on current market pricing, a hold in December is more likely than a hike. By "more likely" we mean better than even odds, based on the market figures above, not a promise.
The Bank itself was guarded. It said there "could be a need to increase the policy rate further," mainly to stop high energy costs from feeding into broader inflation, but that it would proceed carefully. Its senior deputy governor, Carolyn Rogers, called the housing outlook "subdued."
What does this mean for sellers?
If you are waiting for prices to bounce back before you list, the hike makes that wait longer. Buyers have less to spend, and the October board reports show plenty of choice in most markets (Toronto, Vancouver, Calgary).
Lower rates are the usual trigger for a rebound, and our forecast does not show them arriving soon:
Forecast, not a prediction of any lender's rate. Properti Edge forecast, November 2026: the average of eight Canadian bank and credit union forecasts, plus a mortgage spread. General information, not advice.
When do the banks expect rates to fall?
None of them does, within their forecast horizons. We read the latest rate forecasts from RBC, TD, Scotiabank, BMO, CIBC, National Bank, Desjardins and Central 1, all published between September 11th and October 13th, before the hike. Not one shows a cut in the Bank of Canada's rate before the end of 2027, and those that run into 2028 show none there either. Most expected the opposite: RBC, Scotiabank, National Bank, CIBC and Central 1 had the rate rising to between 2.75% and 3.25% during 2027. TD and BMO expected it to stay at 2.25%, a view the October 28th hike has already overtaken.
The forecast has variable rates edging higher into 2027 and then holding, which implies no cut in the Bank of Canada's rate through 2028. Fixed rates are expected to peak around now and ease only slowly, by about 0.1% a quarter. On that path, a meaningful rebound in prices before the middle of 2027 is unlikely. By unlikely, we mean less than a one-in-four chance. A hold in December would help sentiment, but it would not undo the hike or bring rates down.
What should you watch?
December 9th: the next Bank of Canada decision.
Your lender's prime rate, if you have a variable mortgage.
5-year bond yields. If they stay near today's levels, fixed rates have room to come down.
From Properti Edge
See what the hike did to your own budget
Buying Power uses your income, debts and down payment to show a borrowing range under today's rates and the stress test. It is a range, not an approval.
General information, not advice.
This is general information, not advice. Speak to a mortgage broker or your lender about your situation before acting.
